August remittances jump up 15.3% year-on-year

Amount to $1.761b, however, two-month data conveys 3.2% drop compared to 2015

KARACHI: Overseas Pakistani workers remitted $1,761 million in August 2016, which is 15.3% higher compared with the amount sent home in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP) on Friday.

This is in sharp contrast to what happened in July 2016, in which remittances dropped by a significant 20.2% compared with the same month of the previous fiscal year, prompting some analysts to warn of an imminent balance of payment crisis if the trend continued in coming months.

The debate gained so much traction that the State Bank of Pakistan’s (SBP) governor called a press conference last week to clarify that there was no reason to panic over the sudden drop in remittances in July.

“There is no reason to panic. Because of Eid, people sent a record amount of money in June while banks were effectively closed for the first 10 days of July. So to get a better picture, one needs to take average of remittances that the country received in June and July,” the governor said.

“Pakistan has successfully fulfilled its debt commitments in the last few years. With higher foreign reserves, the country is in a much better position to repay its debts in the next four to five years,” he added.

However with declining exports, the country cannot ignore even a single-digit decline in remittances.

There is still an overall decline of 3.2% in remittances in the first two months (July to August) of fiscal year 2017 (FY17) compared with the same period of previous fiscal year. Workers sent $3,089 million in July and August 2017 compared with $3,191 million received during the same period of last year, according to the SBP data issued on Friday.

Pakistan received remittances amounting to $19.9 billion in 2015-16, up 6.4% from the previous fiscal year. Remittances play a major role in stabilising the country’s external sector, as they make up for almost half of the import bill and cover the deficit in the trade of goods accounts.

Country wise details show that remittances coming from every country and region jumped in August 2016 compared with August 2015.

Inflows in August 2016 from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and the EU countries amounted to $507.26 million, $401.18 million, $223.7 million, $192.64 million, $222.57 million and $43.5 million respectively compared with the inflow of $483.3 million, $319.15 million, $199.6 million, $206.29 million, $193.75 million and $27.77 million respectively in August 2015.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during August 2016 amounted to $170 million together as against $97.33 million received in August 2015.

Published in The Express Tribune, September 10^th, 2016.

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