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State Bank of Pakistan says sizable amounts remitted from Saudi Arabia, the U.A.E., the U.K. and the U.S.
Pakistan recorded its highest-ever single-month remittances from overseas Pakistanis in July 2020, Prime Minister Imran Khan announced on Monday, terming it “good news” for the country’s economy.
“Remittances from overseas Pakistanis reached $2,768 million in July 2020, highest ever amount in one month in the history of Pakistan,” he posted on Twitter. “This is 12.2% increase over June 2020 and 36.5% increase over July 2019,” he added.
Last week, the prime minister had likewise appreciated overseas Pakistanis for sending more remittances through formal banking channels and not through informal networks such as hawala and hundi. “Remittances for the past fiscal year came in much higher at 9.7 percent annual growth and totaled $21.8 billion for the year,” he said, adding that this had been done despite the economic downturn due to the novel coronavirus pandemic.
The State Bank of Pakistan, in a notification on the July remittances, verified the prime minister’s statement and noted that the increase was encouraging “given the impact of COVID-19 globally.” It noted that sizable amounts of workers’ remittances were received from Saudi Arabia ($821.6 million), the U.A.E. ($538.2 million), the U.K. ($393.9 million) and the U.S. ($250.6 million). “The growth rate in remittances compared to the same month in the previous year is around twice as high as the Eidul Azha-related seasonality typically experienced over the last decade,” it added.
While the government has hailed the increase in remittances, economic observers have warned that it is too early to celebrate. Noting that the bulk of the remittances have been observed from countries where Pakistanis have lost jobs due to the pandemic—especially the Gulf states—they have warned that it is likely this boost is a result of people returning home with their life savings and would result in a substantial decline once this process of repatriation is finished.
The central bank, meanwhile, has credited the increase in the remittances to several factors such as “orderly exchange rate conditions and policy steps taken by the State Bank and the federal government under the Pakistan Remittance Initiative.” It said this included reducing the threshold for eligible transactions from $200 to $100 under the Reimbursement of Telegraphic Transfer Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing campaigns to promote formal channels for sending remittances.
According to the State Bank of Pakistan, overseas Pakistanis remitted $21,841.50 million during fiscal year 2018-19, a growth of 9.68 percent compared to the $19,913.55 million remitted during the same period in the previous year.