That Pakistan received a significantly higher amount of remittances from overseas Pakistani’s is a much needed breather in these somber times, but it was not a complete surprise. Remittance inflows are seen picking up pace in Ramazan and right before Eid ul Fitr as people send more money to their families back home. The increase in inflows is mostly due to Ramazan related expenses as well as money sent home for charity and Zakat.
May 2019 saw an increase of 30 percent in remittances versus the previous month (April 2019), while the year-on-year growth for the month also stood over 28 percent. Remittances for May 2019 touched the highest ever monthly inflows into the country by the overseas Pakistanis, standing at $2.315 billion. The only times monthly remittances have cross $2 billion was twice this fiscal year ($2.09 and $2.06 billion in August and October 2019, respectively), and once in June 2016 ($2.07 billion).
While the holy month of fasting and the festivities that follow have pushed the monthly inflows in May 2019, it is also important to highlight that currency devaluation also played an important role in increasing remittances coming into the country; the month of Ramazan coincided with the time when Rupee devalued significantly, and this boosted the money coming into the country from foreign expatriates. So while month-on-month increase can be largely attributed to Ramazan and Eid, year-on-year growth can be attributed to currency devaluation.
However, these are not the only factors driving remittance growth; crackdown on Hawala/Hundi and vigilance on money laundering as well as organic growth coming from the initiatives of PRI in collaboration with SBP, the federal government and other stakeholders are also to be attributed.
Overall, remittances in 11MFY19 crossed $20 billion mark, which was also a first; remittances for the entire fiscal years have hovered close to $20 billion but never crossed that barrier. Though already at record levels for 11 month inflows, remittances for FY19 are much likely to post a two-digit growth after stagnating between $19.5-19.9 billion for the past three years. This can be seen from the illustration where a conservative estimate of $1,500 is assumed for June 2019.
Country-wise, it can be seen that inflows from all destinations registered a growth in May 2019 whether its month-on-month or year-on-year. Even countries like Saudi Arabia, UAE and the other GCC countries that have shown weak inflows due to the labour market and economic changes in these countries have shown double digit growth in both cases (YoY and MoM) in May 2019. Overall in 11MFY19 however, the picture remains the same with only slight improvements.
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