PHOTO: REUTERS
According to data released by the State Bank of Pakistan (SBP) on Wednesday, the country received $15.59 billion in remittances during the first ten months (July-April) of the current fiscal year, a decline of 2.79% from $16.04 billion in the same period of the previous fiscal year.
Similarly, remittances in April were also down by 9% compared to $1.69 billion that the country received in March. Remittances play a major role in stabilising Pakistan’s external sector, as they make up almost half the import bill and cover the deficit in the trade of goods account. Nevertheless, in recent times, they have come under pressure due to global economic slowdown on the back of low crude oil prices.
Country-wise details for April show that the inflow of remittances from Saudi Arabia - the country that hosts the largest diaspora of Pakistanis (about 2.2 million) in the world - stood at $439 million, down by 10.2% compared to $489 million in the same month of the previous year. Major reason for this decline could be that the kingdom has deported more than 39,000 Pakistanis in the past few months due to low oil prices and growing security concerns.
Meanwhile, funds from other Gulf countries (including Bahrain, Kuwait, Qatar and Oman) also declined to $175 million, down by 12.5% from $200 million in the April-on-April comparison.
Nevertheless, remittances from the United Arab Emirates remained relatively stable at $344 million compared to $346 million in the same period under review.
Under the same April-on-April comparison, remittances from the European Union countries increased to $42 million from $40 million and inflows from the United States increased to $200 million from $190 million. However, inflow from the United Kingdom significantly declined to $192 million from $222 million.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during April 2017 amounted to $147 million together compared to $171 million received in April 2016.
Declining exports and a gradual slowdown in remittances have been a major concern for the economic stakeholders of Pakistan. The country received remittances amounting to $19.9 billion in the fiscal year 2015-16, up 6.4% from the previous year.
Analysts have warned that the country’s foreign reserves might deplete fast in the coming months unless its policymakers take serious steps in increasing exports on sustainable basis.
However, the SBP is confident that the country faces no immediate threat from the slowdown in remittances and it is in a much better position to repay debts in the next four to five years.
Published in The Express Tribune, May 11th, 2017.
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