Overseas Pakistanis sent remittances amounting to $12.7 billion in July-February, which translates into a year-on-year (YoY) increase of 6%, according to data released by the State Bank of Pakistan (SBP) on Thursday.
Remittances amounted to almost $12 billion in the same eight months of the preceding fiscal year.
Meanwhile, remittances amounted to almost $1.52 billion in February 2016 alone, which is 6.7% more than the remittances received in the preceding month, SBP data shows. Pakistanis based in foreign countries sent home $18.4 billion in the fiscal year 2014-15, which translated into a YoY increase of 16.5%.
Inflows from Saudi Arabia were the largest source of remittances in Jul-Feb. They amounted to $3.8 billion in the eight months, up 7.7% from the corresponding period of the last year.
Remittances received in Jul-Feb from the United Arab Emirates (UAE) increased 8% to $2.8 billion on a YoY basis. Inflows from the UAE had registered the largest increase (26.1%) from any major remittance-sending country in 2014-15, SBP data shows.
In the first eight months of the current fiscal year, remittances from Dubai have surged 35.2% YoY. But the figure for overall inflows from the UAE so far has remained subdued because of a 23.9% annual decline in remittances from Abu Dhabi over the same period.
Remittances from the United States and the United Kingdom remained $1.7 billion and $1.6 billion, respectively, in Jul-Feb. The YoY change in remittances from the US and the UK has been -3.2% and 1.8%, respectively.
The US effect
According to a separate SBP report issued recently, it was postulated that US workers of Pakistani origin are holding on to their savings within the United States instead of remitting them back home. They are withholding that portion of their savings that they would otherwise send their families for “investment purposes,” the SBP said.
In the presence of a wide gap between the rates of investment returns in the United States and Pakistan, US workers of Pakistani origin would usually prefer investing their savings in Pakistan. It resulted in a healthy annual growth in worker remittances from the United States for many years.
However, this changed recently. With interest rates going up in the United States and coming down in Pakistan, the difference in the average investment returns is narrowing.
Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $1.5 billion in Jul-Feb, which is 12.6% higher than the remittances received from these countries in the same months of the preceding fiscal year.
Remittances from Oman in Jul-Feb equalled $525.7 million while those from Kuwait, Bahrain and Qatar amounted to $487.7 million, $299.5 million and $242.9 million, respectively.
This means the overall share of the oil-rich GCC countries in Pakistan’s remittances is over 64.4%.
Analysts fear remittances from these countries may dwindle going forward, as their governments begin to scale back infrastructure spending in the wake of a sharp fall in global oil prices.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries in February amounted to $120.2 million as opposed to $86 million received last year.
Published in The Express Tribune, March 11th, 2016.