Overseas Pakistanis’ contributions along with banking channels support and the government’s scheme had a tremendously positive impact on the inflows of remittances in Pakistan, which reached an all-time high of $2.4 billion in June 2020, closing FY 2020 with a total of $23.1 billion.
The inflows of the remittances remain steady despite the COVID-19 pandemic that hit the global economy, created unemployment, and caused a substantial decrease in workers’ remittances.
According to the State Bank of Pakistan, workers’ remittances rose by a significant 50.7% during June 2020 to reach record-high $2.466 billion compared with $1.636.4 billion in June 2019.
Countries with Major Contribution of Remittances
During June 2020, larger amounts of workers’ remittances were received from Saudi Arabia ($619.4 million), the US ($452.0 million), UAE ($431.7 million) and UK ($401.0 million) recording an increase of 42.0 percent, 7.1 percent, 33.5 percent, and 40.8 percent respectively as compared to May 2020.
The significant increase in remittances during June 2020 can be attributed to a number of factors. Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier.
Further, it is also believed that they sent remittances to support extended families and friends due to COVID-19. In addition to these, efforts by the government and SBP also played their role in increasing the inflow of remittances during FY20 in general and the lockdown period, March 2020 till June 2020, in particular.
On a cumulative basis, remittances increased to a historic high of $23,120.7 million during FY20, witnessing a growth of 6.4% over $21,739.4 million during FY19.
It would also be pertinent to mention here that the inflow of remittances registered an increase of 7.8% during March-June 2020 compared with the corresponding period of 2019.
Role of Banks and Govt Scheme
Supportive government policies in terms of extension of Reimbursement of TT Charges Scheme (Free Send Remittance Scheme) to small remitters by reducing the threshold from $200 to $100, as well as the closing of borders, broadening the scope of an incentive scheme for marketing scheme for financial institutions increased the incentives for sending remittances through regular channels.
Further, on-boarding of a large number of technology-based money transfer companies by SBP and PRI also helped absorb the shock of lockdowns. Financial institutions were motivated to use effective marketing campaigns with a particular focus on digital channels for sending and receiving remittances to promote the use of legal channels.