The strong uptrend in remittances received by Pakistan persisted in August 2021 as well as inflows grew at the fastest pace in a decade at 26.8% year-on-year and reached $2.66 billion.
The receipts had been calculated at $2.1 billion in the same month of last year, according to a statement issued by the State Bank of Pakistan (SBP) on Friday.
It underlined that remittances had remained above $2 billion for the 15th successive month in August 2021.
“Moreover, August marked the sixth successive month when workers’ remittances were recorded at around $2.7 billion on average,” the release stated.
The SBP elaborated that the improvement in receipts came in the wake of proactive policy measures taken by the government and the SBP to incentivise the use of formal channels, curtailed cross-border travel in the face of Covid-19 and altruistic transfers to Pakistan amid the pandemic.
Moreover, orderly foreign exchange market conditions also helped prop up the remittances, it said.
In comments to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq stated that the increase in remittances was witnessed primarily due to the crackdown on the illegal Hundi/ Hawala operators.
“Moreover, the boost in digital payments in Pakistan due to the pandemic accelerated the inflow of remittances,” Tariq highlighted.
He pointed out that government’s incentives for banks also played a critical role in increasing the receipts.
Echoing his views, Arif Habib Limited Head of Research Tahir Abbas said that with physical travel restrictions in place, overseas Pakistanis were forced to send remittances back home through formal channels rather than carrying the money themselves on visits to Pakistan.
“The country is witnessing a modest inflow of remittances since Covid struck the world in March 2020 mainly due to increased use of formal channels,” he added. “In addition, crude prices have largely stabilised and oil-dominated Middle Eastern economies are experiencing a rebound that lent support to Pakistan’s remittances.”
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Arif Habib Commodities CEO Ahsan Mehanti underlined that rupee depreciation throughout the month of August fuelled the uptrend in remittances from the overseas Pakistanis.
He was of the view that developments on the Afghanistan front might also have aided the increase in the pace of remittances and stated that a modest chunk of remittances could have come from the neighbouring country.
Alpha Beta Core CEO Khurram Schehzad pointed out that rapid economic recovery in Pakistan restored the confidence of foreigners in the economy and gave a push to remittances. He predicted stability in remittances around the current levels.
Overseas Pakistanis in the US sent home a 38.5% higher amount on a year-on-year basis at $279.2 million in August 2021. Receipts from the US had stood at $201.6 million in the same month of last year.
Expatriate Pakistanis residing in the United Kingdom remitted $352.8 million in August 2021, which was 16.7% higher than the $302.3 million received in August 2020.
During the month under review, remittances from Saudi Arabia increased 17% to $512.3 million compared to $409.6 million in the corresponding month of previous year.
Pakistanis residing in the Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, sent home $289.2 million in August 2021 against $226.1 million in August 2020.
Remittances from the European Union soared 75.3% to $291.8 million in August 2021. Receipts from the EU had stood at $166.5 million in August 2020.
Published in The Express Tribune, September 11th, 2021.
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