Overseas Pakistanis sent around $4 billion remittances during the first two months of this fiscal year, according to data released by the State Bank of Pakistan (SBP) on Monday.
The total remittances increased 13.45 per cent to $3.966bn during the July-August period. The central bank said that during August the inflow of workers’ remittances amounted to $2.037bn, which is 5.6pc higher than July and 4.24pc higher than August 2017.
Remittances are second most important contributor to the country’s overall foreign exchange reserves after exports. During FY18, Pakistan’s remittances were equal to total export earnings.
Inflows from US saw a significant jump of 31.5pc, posting the highest increase during first two months of 2018-19 with total inflow at $597m. The United Kingdom, home to a large Pakistani expatriate population, also posted a 24pc jump in total inflows clocking in at $556m during July-Aug period. Furthermore, amongst the Gulf states, inward remittances from the UAE swelled by 15.4pc reaching $894m during the period under review.
In addition to that, remittances from the EU also increased by 8.4pc with total inflows reaching $124m compared to same period last year.
On the declining trend, remittances from Saudi Arabia fell to $903 million down by 1.86pc, whereas those from the Gulf Cooperation Council countries dropping by 7pc to $392m during July-August FY19.
Despite the festive season during the month, August saw a decline in remittances from Saudi Arabia – largest contributor – dropping by $45.5m to $465.5m in August.
Remittances from UAE increased to $461m by $21m in August. Remittances from United States also increased by $57m and by $29m from UK.
Pakistan’s widening current account deficit has increased the country’s dependence on remittances; however, manpower exports to Middle East have dropped significantly during the last two years. Saudi Arabia’s change in policy towards foreign workers, looking to enable the native population, has resulted in loss of jobs for Pakistani workers and in turn declined the overall remittances contribution from the country.
The newly elected government has also asked overseas Pakistanis to send $1,000 per head to fund the construction of dams. This appeal’s effect is likely to be reflected at the end of the first quarter of FY19.
However, the government has yet to come up with measures to address the widening trade and current account deficits. The finance minister has recently said that the country needs $9bn to meet its current account needs.