KARACHI: Strong remittance inflows from Saudi Arabia and the United Arab Emirates (UAE) helped Pakistan sustain monthly inflows of over $2 billion for 14th consecutive month, the central bank said on Tuesday while announcing the results for July 2021.
Saudi Arabia and the UAE continued to be the top contributors to Pakistani workers’ remittances, with the inflows of $641 million and $531 million respectively.
“Workers’ remittances continued their strong trend, remaining above $2 billion for the 14th consecutive month,” the State Bank of Pakistan (SBP) said in a statement, adding “this is the second-highest ever level of remittances reported in the month of July.”
The bank data reflected an increase of 0.7 percent in the remittance inflows in July compared to the previous month, though it also recorded a decline of 2.1 percent over the same month last year.
“This marginal year on year decline was largely on account of Eid-ul-Adha, which resulted in fewer working days this July compared to last year,” the SBP noted.
Out of a total inflow of $2.71 billion, $1.2 billion or 43 percent originated from Saudi Arabia and the UAE.
The country has been receiving over $2 billion in monthly remittances since June 2020.
“These inflows are through official channels as the number of people traveling has significantly curtailed after COVID-19 outbreak in 2020,” Muzammil Aslam, a senior economist based in Karachi, told Arab News on Tuesday.
“This continuous trend shows that these inflows are genuine and contradict the perception that a large number of laborers from the Middle Eastern countries were laid off [during the pandemic] and were bringing their money with them,” he added.
Pakistan received $29.37 billion during the last fiscal year FY21, with 47 percent or $13.78 billion originating from Saudi Arabia and the UAE.
The remittances of $7.6 billion from Saudi Arabia in FY21 were more than the loan amount of $6 billion that Pakistan negotiated with the International Monetary Fund (IMF).
However, financial experts say the IMF program comes with some added benefits.
“The IMF program helps secure funds from other sources too,” Muhammad Sohail, chief executive officer of Topline Securities, told Arab News. “Plus, the IMF program brings fiscal and monetary discipline.”
The central bank attribute the increase in remittance inflows to its proactive policy measures that it says have incentivized the use of formal banking channels.
It also acknowledges the role of COVID-19 which has curtailed cross-border travel and resulted in an increase of altruistic money transfers to Pakistan amid the pandemic.
“Orderly foreign exchange market conditions have positively contributed toward the sustained improvement in remittance inflows since last year,” the SBP added in its statement.
