Pakistan remittances hit $18.7bln, on course for all-time high

Pakistan is on track to receive record remittances this year as the overseas Pakistanis continued to send above the $2 billion inflow mark for the ninth consecutive month in February, says a latest report.

State Bank of Pakistan’s latest data shows that workers’ remittances amounted to $2.266 billion in February, reflecting a year-on-year growth of 24.2 per cent. They sent 24.1 per cent more money in February during the July-February period as remittances reached $18.7 billion.

“A large part of workers remittance inflow during July-February was sourced from Saudi Arabia [$5 billion], the UAE [$3.9 billion], the United Kingdom [$2.5 billion] and the United States [$1.6 billion],” the SBP said in a statement on Thursday.

The central bank attributed the rise in remitrances to policy measures undertaken by the government and the SBP to encourage inflows through formal channels, limited cross-border travel due to Covid-19, medical expenses and altruistic transfers to Pakistan amidst the pandemic, and orderly exchange market conditions.

Analysts said the country may receive record remittances of up to $28 billion if the similar upward growth trend continues in the second half of the fiscal year ending on June 30.

Pakistan received $23 billion in remittances during financial year 2019-20.

“Overseas Pakistanis residing in the UAE and Saudi Arabia remitted four per cent more money back home in February compared to the same month last year,” according to a research note by Arif Habib Limited.

Ratings agency Moody’s said increased remittances are credit-positive for banks and expects remittance inflows into Pakistan will increase in the coming years.

“We do not expect such high remittance growth levels to persist, but believe remittances have the potential to increase in coming years, supported by the Pakistan Remittances Initiative and technical advances that materially reduce transaction costs, particularly for remittances through electronic and official channels,” Moody’s said in a latest report.

“The increase is credit-positive for Pakistan’s banks. The increase is also contrary to our expectation that the pandemic would keep remittances flat and the World Bank’s forecast of a sharp decline in global remittances,” the ratings agency added.