KARACHI: Beyond market expectations, Pakistani expatriates managed to send higher remittances worth $1.79 billion in April 2020 despite global lockdowns.
The encouraging inflows may help the rupee to strengthen against the US dollar in the short run.
Growth in receipts has mainly come from the US, followed by Saudi Arabia where the majority of Pakistani expatriates live.
“Thanks to Ramazan due to which the expatriates sent more remittances to their families in Pakistan…despite the Covid-19 health crisis around the globe,” the head of remittances department at a top bank said while talking to The Express Tribune.
Remittances slow down to $7.48b
Households spend comparatively more during Ramazan and on Eidul Fitr, which is likely to fall on May 25. Moreover, families were in need of higher funds to cope with the impact of coronavirus pandemic.
“Remittances spiked from the US for the reason Pakistanis send more donations and Zakat funds every year during Ramazan…to be distributed among the needy back home,” the banker said. “Overall, we had expected poor remittances in April keeping in view the Covid-19 crisis,” he said.
Workers’ remittances improved around $20 million, or over 1%, to $1.79 billion in April 2020 compared to $1.77 billion in the same month of the previous year, the State Bank of Pakistan (SBP) reported on Monday. Cumulatively, in first 10 months (Jul-Apr) of the current fiscal year, the remittances increased 5.51% to $18.78 billion compared to $17.80 billion in the same period of the previous year, the central bank added.
On a month-on-month basis, however, the inflows were 5.5% lower than the $1.89 billion received in March 2020, it said. Workers’ remittances may improve to around $2 billion in May after a significant number of remittance-transferring firms reopened in the past two to three days after the strict lockdown was eased in Saudi Arabia.
“The growth, if any, will be in response to Eid,” he said.
The higher inflows in April fuelled expectations that workers’ remittances would total around $21-21.5 billion in the whole FY20, he said.
Prior to the outbreak of the coronavirus pandemic, the market had estimated total remittances of around $23 billion for the year, he added.
“Going forward, we do not see a huge remittance crisis in case of Pakistan considering our expatriate labour force is mostly serving in the construction and transport sectors instead of doing white colour jobs like the ones in the hotel industry. “Some of the Pakistani workers have definitely faced layoffs abroad…but a majority of them will face the problem only if the international crude oil price crisis prolongs.”
“Oil prices have bounced back to $30 per barrel (compared to minus $37 on the futures counter recently). Prices should revert to around $50 per barrel in the near future as countries slowly resume economic activities around the globe. This should help Pakistani workers to remain in their workplaces (abroad),” the banker said.
On the flip side, Pakistanis may face trouble in sending remittances through legal channels as Saudi Arabia has imposed a fee of 25 riyals on remittances through physical branches. The kingdom imposed the fee to encourage online transactions as a precautionary measure against the coronavirus.
Besides, the kingdom also increased the value-added tax (VAT) on transactions to 15% from 5% earlier, he said.
Around 11.1 million Pakistanis are working abroad. More than half of them are in Saudi Arabia, according to the government.
In April 2020, the inflow of remittances from Saudi Arabia increased 5.45% to $451 million compared to $428 million in April 2019.
Remittances rise 5.4% to $15.13b during Jul-Feb FY20
From the US, the remittances spiked 54.45% to $402 million in April compared to $260 million in the corresponding month of last year.
However, remittances from the UAE dropped to $354 million compared to $372 million last year. Remittances from the UK dropped to $227 million compared to $280 million in the previous year.
Pakistanis sent remittances worth $153 million from Gulf Cooperation Council (GCC) countries (including Bahrain, Kuwait, Qatar and Oman) compared to $175 million last year. They sent $40 million compared to $48 million from European Union countries. Remittances from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries stood at $163 million in April 2020 against $206 million in April 2019, the central bank reported.
Published in The Express Tribune, May 12th, 2020.
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