Remittances hit record high
Inflows trend suggests that the remittances may total $31 billion in the full fiscal year 2021-22, an official said. Photo: file
Beating the market expectations, workers’ remittances sent home by overseas Pakistanis have surprisingly surpassed the $3 billion mark in a month for the first time in history, apparently to support their family members to spend more during Ramazan and on Eid.
“Remittances crossed the monthly mark of $3 billion for the first time,” the State Bank of Pakistan (SBP) reported on its official Twitter handle on Friday.
The country has received all-time high remittances for the second consecutive month in April 2022 at $3.12 billion. Earlier, it witnessed record high remittances at $2.81 billion in the previous month of March. The market was expecting the remittance receipts to be around the previous month’s level, as they were at record high.
However, “they came $200-300 million more than the market expectations,” Ismail Iqbal Securities Head of Research Fahad Rauf said while talking to The Express Tribune.
The inflows of workers’ remittances from non-resident Pakistanis play a critical role in the domestic economy, as they help economic managers to partially pay for elevated import bills and repay foreign debt.
The remittances grew strongly by 11.2% to $3.12 billion in April 2022 as compared to $2.81 billion in the previous month of March. The inflows were 11.9% higher as compared to $2.79 billion recorded a year ago in April 2021, according to the central bank.
The inflows were mainly sourced from Saudi Arabia ($707 million), the United Arab Emirates ($614 million), the United Kingdom ($484 million) and the United States ($346 million) during the month under review.
Cumulatively, in the first ten months (Jul-Apr) of the current fiscal year 2021-22, the remittances surged 7.6% to $20.08 billion as compared to $24.23 billion in the same period of the previous fiscal year.
“The historical trends suggest the remittance inflows peak out in the month of Ramazan and during Eid festivals almost every year,” Rauf said.
The non-residents Pakistanis send more money to help their family members to cope with elevated inflation in the country during Ramazan and Eid.
Besides, they send their savings for investment purposes in the home country as well to avoid devaluation in the rupee, he said.
The remittances may decrease during the ongoing month of May, “as it usually happens in the month after Eidul-Fitr”. However, remittances may see a new high in June ahead of Eidul Azha sometime in July, he said.
“The inflows trend suggests the remittances may total at over $31 billion in the full fiscal year 2021-22,” he said.
He said the majority of the non-resident Pakistanis live in oil producing and exporting countries, namely Saudi Arabia and the UAE.
The jump in international oil prices has supported the growth in the Middle Eastern economies after recovery from Covid-19 and in the wake of Russia-Ukraine conflict.
“The higher oil prices may have helped expatriates to get higher earnings in the countries.”
Not only the Middle Eastern countries, but western countries including the US and UK also stood as rich sources of remittance flows into Pakistan, he said.
The growth in inflows from almost all the regions across the world suggested that non-resident Pakistanis have sent money generously in the month under review.
“They also send funds in Zakat and charity during the month of Ramazan,” he said.
With the latest inflow of $3.12 billion, the workers’ remittances have continued the unprecedented trend of staying above $2 billion over the last 23 months (since June 2020), the central bank data suggests.
Country-wise breakdown
Remittances from Saudi Arabia increased 5% to $707 million in April 2022 as compared to $673 million in the same month of the previous year.
Inflows from the UAE surged 10% to $614 million during the month as compared to $558 million in the corresponding month of the previous year.
It surged 11% from the UK to $484 million as compared to $435 million. Moreover, inflows rose 18% from the US and amounted to $346 million in April 2022 as compared to $294 million in the same month of 2021.
From EU countries, the inflows increased 17% to $298 million from $254 million in April 2021.
The flow of remittances from the remaining countries also rose 117% to $676 million in the month as compared to $578 million in the same month of the previous year.
Published in The Express Tribune, May 14th, 2022.
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