Remittance inflows received from overseas Pakistanis broke another record, reaching $21 billion for the financial year 2018-19.
According to the State Bank of Pakistan (SBP), Pakistani workers remitted $21.841 billion during FY19 showing a growth of 9.68% compared with $19.9 billion received during the same period in the preceding year.
These inflows are slightly above the projection set by the central bank and different think tanks, which is $20.5 billion to $21.5 billion.
The growth in the remittance inflows was recorded due to multiple factors, including an incentivized government policy, improved mechanism and banking channels, payment for dam funds, and higher remittances by expatriates to their families.
Pakistanis living in Saudi Arabia contribute the highest share in the remittances, at $5 billion. This is followed by UAE with $4.35 billion, while remittances inflows from UK and USA were at $3.41 billion and $3.4 billion during the financial year 2018-19.
Remittances from GCC countries including Bahrain, Qatar, Oman, and Kuwait stood at $.2.1 billion in the closing financial year. Overseas Pakistanis in Malaysia remitted $1.5 billion in FY19. Remittances from Europe were recorded at $608 million in the said period.
According to rough estimates, remittances can be enhanced to $30 billion a year with more incentives for overseas Pakistanis to use formal banking channels. This is because increasing inflows will greatly offset the pressure on import payments, current accounts, and foreign borrowing.
The incumbent government is working with the central bank to improve the inflows, however, it hasn’t had much success. The government provides an incentive of Rs. 1 for each $1 incremental remittance transaction to foreign exchange companies and banks.
On the other hand, the government is keeping a close eye on informal remittance channels that can be used for money laundering.
On a long-term basis, the government should not only increase the export of skilled manpower to various countries but it should also streamline banking and payment channels with the introduction of PayPal, etc.