Remittances soar 9.3% to $1.89b in March

Experts say beginning of Ramazan may improve inflows

KARACHI: Contrary to expectation for a notable drop, Pakistan has received higher foreign currency inflows sent home by expatriate workers in March, a trend which suggests improvement in international payment capacity and strengthening rupee against the US dollar in the short-to-medium run.

However, the receipt of workers' remittances during the first 10 days of the current month of April stands low amid the coronavirus pandemic and lockdowns around the globe. The beginning of Ramazan, later this month may potentially cause improvement in the inflows during the month subject to betterment in the health crisis, a leading bank's head of remittances told The Express Tribune.

The workers' remittances increased 9.3% to $1.89 billion in March 2020 compared to $1.73 billion received in the same month of the last year, the State Bank of Pakistan (SBP) reported on Friday.

"Had the COVID-19 crisis not hit the world, the workers' remittances would have been higher by around $100-125 million to over $2 billion in March 2020," the banker commented.

The remittances were also higher by 3.8% in March compared to the previous month of February 2020 inflows at $1.82 billion, the central bank said.

With this, the workers' remittances received in the first nine-month (July to March) of the current fiscal year increased 6% to $17 billion compared to a little over $16 billion received in the same period of the last year, it added.

Pakistan managed to receive higher remittances since the health crisis worsened in the second half of March globally, the banker said.

"The thumb rule suggests almost 40% remittances are received in the first 10 days of every month, while the remaining 60% is received in the last 20 days," he said.

The thumb rule may, however, prove to be wrong for the current month of April considering the Ramazan factor. "Historical data suggests that expatriate Pakistani workers send 15-20% higher remittances some 10-15 days before the beginning of Ramazan and the additional growth is seen throughout the fasting month," he said.

"The Ramazan factor is expected to keep remittances stable in April on a month-on-month basis," he added.

"If Ramazan wouldn't have been falling in April, the remittances might have suffered a drop of around 15-25% (month-on-month basis) considering the health crisis," he stated.

Topline Research said last week "we now expect remittances to clock in at $20.9 billion and $20.5 billion in FY20 and FY20, respectively (versus an earlier estimate of $22.7 billion and $23.1 billion)."

Majority of the Pakistani workers are living in the Middle Eastern regions (some 50% alone in Saudi Arabia) out of total over 11 million on December 30, 2019.

Country-wise remittances

During March 2020, the inflow of workers' remittances from Saudi Arabia increased by 11% to $452 million compared to $406 million in March 2019.

The remittances from UAE also rose 11% to $420 million in the month compared to $378 million in the same month last year. The dispatches from the US surged 36% to $352 million compared to $259 million. Remittances, however, dropped 12% to $249 million from the UK compared to $282 million.

Pakistanis dispatched remittances worth $173 million from GCC countries (including Bahrain, Kuwait, Qatar and Oman) compared to $168 million. They sent $43.5 million compared to $44.5 million from EU countries.

Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during March 2020 came in at $204 million against $197 million received in March 2019, the central bank reported.

Published in The Express Tribune, April 11^th, 2020.

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