Remittances sent by Overseas Pakistanis extended their record run with inflows of Rs. 2.5 billion received from various countries in May 2021, according to the State Bank of Pakistan (SBP).
The remittances inflows are 33.5 percent higher than the same month last year. These numbers were also higher than the monthly average of $2.4 billion during July-April FY21.
On a cumulative basis, remittances surged to $26.7 billion during July–May FY21, higher by 29.4 percent over the same period last year. Remittances during the first eleven months of FY21 have already crossed the full FY20 level by $3.6 billion.
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According to the SBP, the workers’ remittances remained above $2 billion for a record 12th straight month.
1/2 Remittances extended their record run of above $2bn in May. At $2.5bn, they were up 34% from a year ago. The usual post-Eid monthly dip was also much smaller this year. pic.twitter.com/9z2lmvC2er
— SBP (@StateBank_Pak) June 10, 2021
On a month-on-month basis, workers’ remittances fell by 10.4 percent in May 2021 compared to April 2021. This fall was expected as remittances usually slow in the post-Eid-ul-Fitr period.
As Eid fell in mid-May 2021 with markets closed a week earlier, there was some front-loading of remittances in April 2021. However, the seasonal decline in May 2021 was less than half the average decline observed during FY2016-2019.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities, said, “The Remittances have kept the country & currency bullish. The 34 percent growth is commendable – let’s hope to continue the double digit growth in next fiscal year”.
He added, “There should be a permanent end of informal channels so that economy buys time to move from consumption to export oriented story. More importantly, this has given the SBP and Govt opportunity to lower the interest rate and enable growth/fixed capital formation.”
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In FY2020, remittances experienced an exceptional rise due to the easing of COVID lockdowns in the post-Eid period in Gulf countries.
Remittance inflows during July-May FY21 were mainly sourced from Saudi Arabia ($7.0 billion), United Arab Emirates ($5.6 billion), United Kingdom ($3.7 billion), and the United States ($2.5 billion).
Record high inflows of workers’ remittances during FY21 have been driven by proactive policy measures by the Government and SBP to incentivize the use of formal channels, curtailed cross-border travel in the face of COVID-19, and altruistic transfers to Pakistan amid the pandemic and orderly foreign exchange market conditions.
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The SBP forecasted that remittances inflows might surge to over $27.5 billion in the financial year 2020-21. However, the values may cross the mark of $28 billion, keeping in view the present growing response from Overseas Pakistanis.
