KARACHI: Pakistan received remittances amounting to $1.724 billion in December 2017, 8.72% higher compared with $1.585 billion the country received in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
Overall, overseas Pakistani workers remitted $9.745 billion in the first six months (July to December) of fiscal year 2018, up 2.5% compared with $9.505 billion received during the same period of the preceding year.
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 a global economic slowdown on the back of low crude oil prices.
It seems that the devaluation of the rupee in second week of December 2017 is showing positive signs in the flow of remittances.
Perturbed with the widening current account deficit, the government finally allowed the rupee to lose its value by over 5% against the dollar in December 2017.
The development is positive for overseas Pakistanis as their families are going to get more rupees against the same amount of foreign currency they remit every month. This may also increase the flow of remittances in coming months as it encourages overseas workers to remit more.
In December 2017, Pakistan received $223 million in remittances from the UK, which is 22.5% higher than $182 million that the country received in the same month of the previous year. In the first six months (Jul-Dec) of fiscal year 2017-18, remittances coming from the UK jumped by 23% to $1.35 billion compared with the same period of last year.
The value of the UK pound has gained at least 8% against the rupee in the last three months. This is the highest jump shown by any major foreign currency against the rupee in the open market.
Analysts believe, apart from other factors, that the increase in the value of any particular foreign currency encourages overseas Pakistanis to send back more money.
Similarly, an increase was also noted in remittances coming from the US as the country received $235 million from the US in December 2017, up 29% compared with $182 million in the same month last year.
Overall, remittances from the US in the first six months of current fiscal year have increased by 9.24% to stand at $1.28 billion.
Pakistan received $396 million from the UAE, up 16.4% compared with $340 million from the same month of the last year.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries (combined) during December 2017 also increased to $193 million compared with $167 million received in December 2016.
Overseas Pakistanis living in the European Union (EU) sent back $55 million in December 2017, up 57% compared with $35 million in the same month of last year.
Saudi Arabia left behind
Remittances from Saudi Arabia – the most important source of remittances for Pakistan – are showing declining trends in recent months.
Remittances from Gulf countries, which have historically accounted for the largest share annually, dropped drastically due to a sharp fall in crude oil prices that hurt the region’s economies.
Pakistan received remittances of $432 million from Saudi Arabia in December 2017, down 9.2% compared with $476 million in the same month of 2016.
Published in The Express Tribune, January 11th, 2018.