Remittances to Pakistan Hit a Record High in 2021
Surging inward remittance is an advantage for an economy at both micro and macro levels. On May 18, 2021, a tweet from Pakistan Prime Minister Imran Khan’s Twitter handle revealed his faith on overseas Pakistanis as the greatest asset of the country. He also expressed gratitude for their trust in this “Naya” Pakistan. The reason for this tweet was the record-breaking money transfer to Pakistan in first 10 months of FY 2021.
Inward remittances from Pakistani expats working abroad have consistently stayed above $2 billion till April 2021, when it rose to an all-time high $2.8 billion. This was 56% higher than the inflows to Pakistan a year ago. According to the State Bank of Pakistan (SBP), in the period of July-April 2021, cumulative remittances to the country reached all-time high at $24.2 billion; an increase of 29% YoY.
In April 2021, Pakistani expats in Saudi Arabia remitted $6.4 billion and those in the United Arab Emirates remitted $5.1 billion back home. Thus, both remained the top 2 contributors to the overall inflows. After all, approximately more than 2 million and 1.27 million Pakistanis reside in the Kingdom of Saudi Arabia and the UAE, respectively. As Pakistani expats sent more money back to Pakistan for Ramadan and Eid celebrations, the nation further received $3.3 billion from the UK and $2.2 billion from the US.
The record-breaking inflows to Pakistan can be linked to certain factors.
Among other factors for increased inward money transfers to Pakistan were proactive policies by the State Bank of Pakistan and the government to encourage more remittances through formal channels. The Central Bank also credited orderly foreign exchange market conditions for this feat, along with people who sent money selflessly into the country during the challenging times.
Additional factors pointed out by Samiullah Tariq; head of research at Pakistan Kuwait Investment were:
According to banking experts and analysts, Pakistan may receive up to $29 billion inflow in 2021. Pakistani expats living in the GCC region, especially in Saudi Arabia and the UAE, are expected to keep the remittance inflows moving north. They have already contributed over 60% of the entire inflows between July and April in 2021.
Increased remittance inflows to Pakistan in 2021 reflect the huge shifts in consumer behaviour, as well as those of policy makers during Covid-19; towards digital. Pakistan, predominantly a cash-based economy has also started its transition towards digitalisation.