Remittances, the backbone of Pakistan's forex reserves, are doing just fine. The August remittances, as per the central bank, stood at $1.329 billion, about 7.14 percent more than same period of last year. The cumulative figure for the Jul-Aug period stood at $2.978 billion, a year-on-year growth of 12.61 percent.
However, the August tally is about 19.4 percent lower over the record high inflow of $1.65 billion in July. Despite the year-on-year growth, political pundits may be tempted to equate the month-on-month remittance decline to the protest call given last month by Imran Khan, the PTI Chief. His call was that overseas Pakistanis should not send remittances through official channels and rather send the proceeds through Hundi. The motive of the call was to show distrust in the government.
Yet the historical data suggest a normal pattern repeating itself this year. As has been highlighted in this column before, official remittances tend to undergo a monthly dip immediately after the Gregorian month in which Ramzan falls.
In the recent past, remittance surges have been in sync with the Eids. The last 4 Eid-ul-Fitrs and last 2 Eid-ul-Azhas have been associated with exceptionally high inflows. But the ball drops the following month. In the figure, the post-Ramzan remittance fall (month on month) is seen for August FY15 (19%), August FY14 (12%), September FY13 (10%) and September FY12 (32%). This pattern dates as far back as FY08.
There is a simple, "household explanation" for the post-Ramzan remittance downturn. Remitters send more money back home in Ramzan: besides dealing with higher prices in the holy month, the extra proceeds are meant for Eid-related spending like apparel and footwear shopping, Zakat, hospitality and sometimes home renovation. The belt-tightening ensues immediately after Eid.
So, move along, nothing much to see here! Remittances are doing okay and they might do better come Eid-ul-Azha. The expatriate community, on a whole, has either not given much serious thought to Khan's call yet. Or if indeed it has been well received (which this column does not advocate) then it will probably reflect in September's month, considering that Khan appealed for Hundi on August 19. Or perhaps remitters simply prefer the safety and convenience of increasingly cost-efficient official transfer channels and want to stay clear of the risks involved in using the Hundi system.
Whatever the case, government must heave a sigh of relief, at least for now.
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