Remittance Flow in Pakistan Increased by 17pc Last Year: World Bank Report

Remittance Flow in Pakistan Increased by 17pc Last Year: World Bank Report

Champs Write Lahore Report: Remittance flow into our country rose by approx. 17% in last year, challenging the gloomy forecasts and in spite of the global Covid-19 pandemic countrywide.

The raise in the home remittances from Pakistanis working abroad last year was much faster than 5.2pc raise in flows to the South Asian countries, conferring to the latest Migration and Development Brief issued by the World Bank’s Report.

Before, the bank had estimated substantial decline in remittances to Pakistan and the rest of the countries in the region because of the coronavirus pandemic that forced several countries across the world to lock down their economies circle and refer migrant workers back home to their countries of origin.

Champs Write

The major growth in remittances flow into Pakistan derived primarily from Saudi Arabia followed by the European Union (EU) countries and the United Arab Emirates.

Forecasters think that restrictions on international travel — for both leisure and religious determinations — because of the pandemic, FATF-related curbs on illegal cash transfer through casual or illegal networks, and incentives offered by the central bank to overseas Pakistanis using banking channels to remit their investments have driven rise in remittances in spite of influences of the Covid-19 crisis on the economies in the host countries.

Moreover, the State Bank of Pakistan’s product Roshan Digital Account brought the positive impact on Pakistan’s economy, which allows overseas Pakistanis to digitally create a bank account with local banks for online stock market and real estate savings, has supported and attract more than $1 billion into the country in the last seven months.

The increasing remittance flow has also supported the central bank prop its foreign exchange reserves to a record at high level, helping current account that has posted a surplus of over $945 million in the first three quarters of the existing financial year.

The rise in remittances during the last few months has been quite faster than ever before and some foreign exchange organizations claim that the flow has increased at least by 20pc or more during Ramazan. Exchange organizations Association of Pakistan chairman Malik Bostan said the Ramazan flows would push the total monthly remittances to the range of $2.8bn to $3bn which is a good sign.

The flow during Ramazan typically raised by 20pc every year on higher amount sent to families, including Zakat and donations.

The World Bank report proposes that the key drivers for the steady flow involved fiscal stimulus that resulted in better-than-expected economic circumstances in the host countries, a shift in flows from cash to digital and from informal to formal networks, and repeated movements in oil prices and currency exchange rates.

The true scope of remittances, which comprises formal and informal flows, is supposed to be greater than formally reported data, though the amount of the impact of Covid-19 on informal flow is uncertain.

South Asia remains one of those areas – with Latin America and Caribbean and the Middle-East and North Africa - where remittances have registered growth while the flows weakened in the rest of the world.

In addition to Pakistan, inner remittances to South Asia were driven by Bangladesh and Sri Lanka. In Bangladesh, remittances presented a brisk uptick of 18.4pc and Sri Lanka saw remittance growth of 5.8pc.

In India, the region’s largest recipient country by far, remittances fell by just 0.2pc, with much of the decline due to a 17pc drop in remittances from the UAE, which offset strong flows from the United States and other host countries.

The remittances to Nepal also to some extent fell by about 2pc.

Overall, South Asia established total remittances of $147bn last year, which the World Bank has again forecast to to some extent slow from last year’s 5.2pc to 3.5pc in 2021 owing to a control of growth in high-income economies and a additional expected drop in relocation to the Gulf countries.

The average cost of transfer $200 to the South Asian region stood at 4.9pc in the fourth quarter of 2020, the lowermost among all the regions. Some of the lowest-cost corridors, creating in the Gulf countries and Singapore, had costs below the Sustainable Development Goals mark of 3pc owing to high volumes, competitive markets, and placement of technological expertise. But costs are well over 10pc in the highest-cost corridors.

Internationally, remittance flows remained strong in 2020, registering a slighter decline than earlier projected. Formally logged remittance flows to low- and middle-income countries touched $540bn or just 1.6pc below the 2019 total of $548bn.

The decline in noted global remittance flows last year was lesser than the one - 4.8pc - during the 2009 global financial crisis. It was also far lower than the fall in foreign direct investment (FDI) flows to low- and middle-income countries, which, without flow to China, fell by over 30pc in 2020. As a result, remittance flows to low- and middle-income countries exceeded FDI of $25bn and overseas growth assistance of $179bn.