FY20 remittances soar to record $23bn

KARACHI: Pakistan received record $23 billion in remittances in 2019-20 while the inflows jumped by 51 per cent year-on-year to $2.466bn in June, data released by the State Bank of Pakistan (SBP) showed on Monday.

Despite economic slowdown caused by the Covid-19, the remittances in the last quarter of the fiscal year 2019-20 i.e. March-June increased significantly helping the country get more than expected inflows.

“Workers’ remittances rose by a significant 50.7pc during June to reach record high of $2.466bn compared with $1.636bn in June 2019,” said the SBP press release.

The inflows in the month grew significantly compared to May when the country received around $1.866bn, rising despite the negative outlook due to the impact of coronavirus on the global economy.

June sees 51pc increase

Policy makers had earlier feared remittances to slump in the last quarter of fiscal year 2020 because of the impact of Covid-19 on the economic activity around the world, but the inflows increased by 7.8pc.

During June, major chunk of the workers’ remittances were from Saudi Arabia at $619.4 million, USA $452m, UAE $431.7m and UK $401m recording increases of 42pc, 7.1pc, 33.5pc and 40.8pc respectively as compared to May.

Highest remittances during the 12 months ending June 30 were received from Saudi Arabia, rising 6.8pc to $5.432bn against 3pc growth in FY19.

Meanwhile, despite 0.98pc growth, the remittances from UAE were second highest in terms of total inflows reaching $4.662bn in FY20. In FY19, remittances from the UAE grew by 6pc.

The highest growth in remittances was witnessed from the United States as it jumped by 25pc to $4.163bn compared to 16.6pc in FY19.

On the other hand, remittances from the UK increased by 1.5pc to $3.465bn in FY20 compared to 18pc in FY19.

The remittances from the Gulf Coopera­tion Council countries were up by 2pc to $2.162bn while inflows from Malaysia were down 8pc to $1.426bn in FY20. The growth in remittances from Malaysia was 35pc in FY19.

The SBP said the significant increase in remittances during June 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,” it said. Further, it is also believed that they sent remittances to support extended families and friends due to Covid-19, it added.

Seasonal inflows in the month of Ramazan coupled by zakat and charity funds collectively increased the inflows during the last fiscal year.

In addition to these, the government and the SBP also played their role in increasing inflows during the FY20 in general and Covid-19 period, said the SBP.

Supportive government policies in terms of extension of Reimbursement of TT Charges Scheme (Free Send Remittance Scheme) to small remitters by reducing threshold amount from $200 to $100. In addition, financial institutions also increased the incentives for sending remittances through regular channels.

“Financial institutions were motivated to use effective marketing campaigns with particular focus on digital channels for sending and receiving remittances to promote the use of legal channels,” said the SBP.