Overseas Pakistanis remitted a record $29.4 billion during 2020-21, helping the country meet its widening deficit and expected accounting deficit within the last month of the just-ended financial year.
The financial institution said that with inflows of around $2.7bn in June (9pc growth year-on-year) and 8pc (month-on-month), workers’ remittances continued their unprecedented streak of above $2bn for a record 13th consecutive month.
Data released by the depository financial institution of Pakistan (SBP) on Tuesday showed that remittances posted a 27 percent year-on-year growth, which was the fastest rate of expansion since FY03.
This growth in remittances helped improve the country’s external sector position despite the challenging global economic conditions within the past year, said the depository financial institution, adding that the seasonal pre-Eid related inflows helped to further boost remittances level during June.
Remittances continue their unprecedented streak of above $2bn for the 13th consecutive month
“Overall, record-high inflows of workers’ remittances during FY21 are driven by proactive policy measures by the govt and SBP to incentivize the utilization of formal channels, curtailed cross-border travel within the face of Covid-19 infections, altruistic transfers to Pakistan amid the pandemic, and orderly exchange market conditions,” said the SBP.
Analysts believe the widening deficit wouldn’t allow the country to finish fiscal FY21 with an accounting surplus. the present account was surplus with $153m during 11MFY21. The deficit within the 11MFY21 was about $24bn, indicating that June would further widen the balance of trade.
The highest inflows of $7.667bn in FY21 were from Saudi Arabia compared to $6.61bn in 2019-20, a rise of 16pc compared to 32.2pc growth within the preceding financial year.
The inflows from Saudi Arabia alone contributed 26.1pc to the entire remittances in FY21. The rising remittances indicate that the Pakistanis workers therein country didn’t lose their jobs thanks to Covid-19 while an improved mechanism for the transfer of remittances also facilitated this increase.
The SBP data showed that the second-highest remittances came from the United Arab Emirates (UAE) in FY21 growing by 8.9pc to $6.114bn compared to $5.612bn in FY20 when inflows by 21.5pc.
The inflows from other GCC countries noted an inflow of $3.309bn while the expansion was 13.7pc against the expansion of 37pc within the preceding year.
The total inflows from the center East during the FY21 were $17.09bn accounting for 58.1pc of the entire remittances sent by overseas Pakistanis during the year.
However, other countries and regions have started appearing as important destinations for Pakistan because the remittances have noted record growth.
The growth in remittances from the united kingdom and us were highly encouraging for Pakistan. The inflows from the UK noted a growth of 58.3pc against a decline of 24.7pc within the preceding year while the remittances from the UK were the third largest in terms of amount because they reached $4.067bn. The remittances from the united kingdom in FY20 were $2.569bn.
The inflows from us also were very significant because they jumped by 58pc to $2.756bn against a net decline of 47 percent during the previous financial year. Both, the united kingdom and the USA were in a strong grip on Covid19 during the previous fiscal which caused serious damages to their economies.
However, the inflows from EU countries remained strong like the previous year. The remittances reached $2.709bn during FY21 compared to $1.778bn within the previous fiscal. the expansion this year was 52.3pc while an equivalent was 192pc in FY20 showing no negative impact of Covid-19 on remittances from EU countries.
Other emerging important destinations of remittances for Pakistan are Australia and Canada because the remittances from Australia during FY21 were $595 million (a growth of 75pc over last year) and $586m from Canada (87pc jump).
