Remittances jump 21.36% month-on-month

11-month figure, however, shows a decline of 2.13%

KARACHI: Overseas Pakistani workers sent remittances amounting to $1.867 billion in May 2017, up 21.36% compared to $1.539 billion in April 2017.

The country received $17.464 billion in remittances during the first 11 months (July to May) of the outgoing fiscal year, a decline of 2.13% from $17.844 billion in the same period of the previous fiscal year, according to data released by the State Bank of Pakistan (SBP) on Friday.

Year-on-year remittances in May 2017 have come down by 3.77% compared to $1.799 billion in May 2016.

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.



Qatar’s blockade

“It is too early to calculate the negative impact of the ongoing diplomatic crisis in the Gulf on the region’s economies,” Topline Securities Head of Research Saad Hashmi commented.

There are fewer Pakistanis working in Qatar compared to Saudi Arabia and UAE, but they still managed to send $342 million to Pakistan in the first 11 months (July to May) of the current fiscal year.

Together, Saudi Arabia, UAE, the US and UK constitute 75% of the total remittances that Pakistan receives annually.

The inflow of remittances in May 2017 from Saudi Arabia - the country that hosts the largest diaspora of Pakistanis (about 2.2 million) in the world - stood at $515 million compared to $548 million in the same month of the previous year.

Remittances coming from Saudi Arabia have come down by 6.57% to $5.03 billion in the first 11 months of this fiscal year compared to $5.39 billion in the same period last year.

The kingdom has deported thousands of Pakistanis in the past few months amid slowdown in its economy due to low oil prices and growing security concerns.

However, the biggest slump is seen in remittances coming from the UK, which have come down by 8.13% to $2.27 billion compared to $2.08 billion in the period under review.

The country wise details for the month of May 2017 show that inflows from the UAE fell to $427 million compared to $381 million in the same period of last year.

Payments coming from the GCC countries (including Bahrain, Kuwait, Qatar and Oman) decreased to $210 million in May 2017 compared to $217 million in the same month of last year.

However, remittances from the US increased to $249 million in May 2017 compared to $202 million in May 2016.

Similarly, remittances coming from the EU countries jumped to $51.2 million in May 2017 compared to $41.6 million in the same period last year.

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 policy makers take serious steps to increase 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, June 10^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.