ISLAMABAD: The remittances in Pakistan are likely to remain flat at the presently high levels in 2022, as the one-off effects of government incentives to attract them fade, though the Afghanistan factor will continue to sustain flows, says the World Bank.

The bank in its report, “Migration and Development Brief” released on Wednesday stated Afghanistan’s fragile economic and political situation emerged as an unexpected prompt of remittance inflows into Pakistan in 2021.

The report stated that Afghanistan’s fragile economic and political situation gave a special impetus to remittance inflows in Pakistan. Following the breakdown of official channels of money transfers to Afghanistan, remittances intended for Afghan refugees in Pakistan, as well as for families in dire stress in Afghanistan, flowed into Pakistan.

According to one report, about 50,000 Afghans crossed the border into Pakistan and Iran some weeks before Pakistan temporarily closed its borders.

In the Gohati and Gandaf refugee camps alone, which once housed around 60,000 Afghans, the numbers soared with the arrival of their relatives in the recent months.

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Most of the Afghans leaving do not intend to return to Afghanistan because of the lack of security, fulfillment of basic needs, and access to education and health care for their families. Their physical presence in Pakistan enables them to receive remittances from their relative migrants abroad.

Until conditions in Afghanistan stabilise, these factors are likely to maintain a steady flow of remittances into Pakistan. In late October 2021, Pakistan imposed several restrictions on outward remittances to Afghanistan, especially in US dollar terms.

The report noted that deployment of workers from Pakistan to the GCC region fell by over 64 percent during 2020and again by another 11 percent during the first nine months of 2021, and in Bangladesh, it fell by 19 percent in the first three months of2021 compared to the same period of 2020.

In Pakistan, deployment of workers to the GCC and other destination countries declined from around 626,000 in 2019 to 225,000 in 2020, and further to 152,000 in the first nine months of 2021.

Pakistan, Bangladesh, Nepal, and Sri Lanka featured in the list of top 50 recipients of remittance inflows in the world.

The significance of remittances in their economies ranged from about 13 percent for Pakistan to 6–8 percent of the GDP for Bangladesh and Sri Lanka.

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The report further stated that Pakistan had another year of record remittances with growth at 26 percent, and levels reaching $33 billion in 2021. In addition to the common drivers, the government’s proactive Pakistan Remittance Initiative to support the transmission of remittances through formal channels was successful in attracting large inflows in 2021.

Presently, the average monthly remittance of a Bangladeshi migrant who performs manual work is only $203 compared to $276 for a Pakistani, $396 for an Indian, $564 for a Filipino, and $533 for a Chinese.

While the high costs of sending money from Pakistan to Afghanistan have a rationale, neither the absolute cost nor the cost increase of sending money from Japan, Thailand, Singapore, or Malaysia to India can be justified.

Cost-reducing policies would create a win-win situation welcomed by migrants and South Asian governments alike. Governments in South Asia routinely face large current account deficits that could be funded increasingly by remittances as more of them flow through official channels of money transfer.

Although South Asia still has the lowest average remittance costs of any world region, at 4.6 percent, the cost of remitting money to South Asia through official channels is high, and informal channels remain popular.

Barring a few exceptions, in most cases the costs increased in 2021.

Copyright Business Recorder, 2021