Pakistan received healthy inflows of over $2 billion on account of workers’ remittances for the fourth consecutive month in September 2020, which was contrary to a drop of 12-20% feared by international financial institutions for the July-December period due to Covid-19.
“Despite Covid, more good news for our economy. Remittances from our hardworking overseas Pakistanis rose to $2.3 billion in September 2020, 31% higher than last September and 9% higher than August 2020. This marks the 4th consecutive month that remittances have remained above $2 billion,” Prime Minister Imran Khan wrote on his official Twitter handle.
Pakistan received remittances in a range of $1.78-1.90 billion per month in the past five months - January-May 2020, according to the central bank.
The head of remittances department at a top bank said the country attracted higher remittances despite 200,000-250,000 Pakistanis lost jobs abroad during the pandemic.
“The reason for the growth in workers’ remittances is obvious. Suspension of international flights to contain the spread of Covid-19 has simultaneously led to the collapse of illegal network of sending remittances through Hawala/ Hundi (reference) system,” he stated.
Owing to that, non-resident Pakistanis sent money to their family members and friends back home through official channels like banks and currency exchange firms.
“High officials should take notice of the positive development and make sure that in future the illegal network does not assemble again when international flights resume, especially from foreign countries,” he emphasised.
“If we sustain the handsome growth in remittances, then we can receive an additional $7-8 billion in the current fiscal year, which will be higher than the International Monetary Fund’s (IMF) loan programme of $6 billion,” he pointed out. Pakistan received record high remittances of $23.1 billion in previous fiscal year 2019-20.
The State Bank of Pakistan (SBP) reported on Monday that workers’ remittances grew 31% to $7.15 billion in the first quarter (July-September) of FY21 compared to $5.45 billion in the same quarter of FY20.
“The level of remittances in September was slightly higher than SBP’s projection of $2 billion,” the central bank said in a statement.
“Efforts under the Pakistan Remittance Initiative (including financial incentives for global and local money transfer firms and banks) and gradual reopening of major host destinations such as the Middle East, Europe and the United States contributed to the sustained increase in workers’ remittances.”
The banker said the shift to formal channels also covered the losses which could have emerged due to the loss of jobs by around 200,000-250,000 Pakistanis abroad.
“We have to deal with only five to six international airports unlike 150 in the US. We can easily control the flow of illegal foreign currencies through international flights. Our law enforcement agencies just need to ensure that they don’t let Hawala-Hundi operators assemble again,” he said. “Remittances should remain in the range of $2.2-2.4 billion per month over the next three months,” he projected.
From January 2021 onwards, airlines may gradually resume international flights. For example, Saudi Arabia - where over half of the 10 million Pakistani expatriates live - announced the resumption of flights to and from Pakistan in January, he added. “The development (growth in remittances) should come as a relief to policymakers, given the higher trade deficit in September ($650 million on a month-on-month basis), and should help contain the current account deficit,” JS Research analyst Ahmed Lakhani said in a commentary.
Overseas Pakistanis sent remittances worth $666 million in September 2020 from Saudi Arabia compared to $516 million in the same month of last year, a growth of 29%.
Remittances grew 12% to $473 million from the United Arab Emirates (UAE) compared to $422 million in the same month of last year.
From the US, remittances worth $180 million were sent, up 54% than $117 million. Non-resident Pakistanis sent $289 million from the UK, up 63% than $177 million.
People from Gulf Cooperation Council (GCC) countries (other than Saudi Arabia and the UAE) sent $261 million compared to $229 million last year. They sent $207 million from European Union countries compared to $144 million. Pakistanis from other countries sent remittances worth $207 million in September.
Published in The Express Tribune, October 13th, 2020.
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