Remittances rise 13.5% in first quarter

Data released by the State Bank shows people are switching to legal channels for sending money back home.

KARACHI: Remittances sent home by overseas Pakistanis rose by 13.5 per cent to $2.64 billion in the first quarter (July-September) of the current fiscal year as more and more people switched to legal channels for sending money back home, according to data released by the State Bank on Monday.

In the same quarter last year, around $2.33 billion were remitted – $314.8 million less than the current figure.

“Strict measures taken by the State Bank to crackdown on the illegal modes of money transfer like ‘hundi’ and ‘hawala’ have compelled overseas Pakistanis to utilise formal banking channels for remitting the foreign exchange,” explained Hamad Aslam, Head of Equity Research at BMA Capital.

Strict restrictions over the past three years on illegal channels for money transfers are bearing fruit and this year the country is expected to receive more than $12 billion in remittances, he said. Last year, the total amount remitted was $8.9 billion.

Moreover, banks have taken facilitation measures like swift processing and reduced fee on money transfer to encourage Pakistanis to opt for legal channels.

Aslam said that the Ramazan and Eid factor also played its part in the high remittances as overseas workers tend to send big amounts ahead of the festival for their families and other relatives. “Money also came in the wake of the flood devastation.”

According to the data, inflow of remittances in July-September 2010 from the United Arab Emirates (UAE), Saudi Arabia, the US, the Gulf Cooperation Council (GCC) countries (including Bahrain, Kuwait, Qatar and Oman), the UK and the EU amounted to $621.28 million, $576.32 million, $511.93 million, $312.73 million, $296.89 million and $84.64 million, respectively.

During the same period last year, they sent $504.01 million, $430.75 million, $498.76 million, $323.87 million, $235.08 million and $78.27 million, respectively.

Remittances from Norway, Switzerland, Australia, Canada, Japan and other countries amounted to $242.52 million against $260.02 million last year.

The monthly average of remittances for the July-September quarter was worked out at $882.10 million compared with $777.17 million during the corresponding period last year.

During September alone, $922.06 million were sent, up 14.38 per cent or $115.94 million, when compared with the $806.12 million received in the same month last year.

Published in The Express Tribune, October 12^th, 2010.