SBP reports 24% jump in remittance inflows for February

• SBP reports 24.2% jump in February in remittances which has now reached $2.266 billion.
  
• The development comes after government incentives attracted people abroad to send more money home through formal channels.
  
• Seasonal factors such as Ramazan and Eidul Fitr may have led to a rise in remittances.
  

KARACHI: The State Bank of Pakistan (SBP) has reported a 24.2% jump in February in remittances which has now reached $2.266 billion, The News reported Friday.

According to the central bank, the development comes on the heels of government incentives that attracted people abroad to send more money home through formal channels

Compared with the same period a year ago, workers’ remittances reached an unprecedented level of $18.7 billion in the eight months of the fiscal year.

Read more: Pakistan records remittances over $2b for eighth consecutive month

“Policy measures are undertaken by the government and SBP (State Bank of Pakistan) to encourage inflows through formal channels, limited cross-border travel due to COVID-19, medical expenses and altruistic transfers to Pakistan amid the pandemic, and orderly exchange market conditions, contributed to this sustained rise in workers’ remittances,” the SBP said.

As a positive sign, the remittances continued exceptional performance and remained above $2 billion for the ninth consecutive month in February.

“Remittances in February are maintaining the momentum, which is positive and the much-needed to support the country's external account as exports continue to remain sticky at $2 billion while international oil prices have shown the strength of late,” said Saad Hashemy, an executive director at BMA Capital.

Predictions

Experts suggest seasonal factors such as Ramazan and Eidul Fitr may have led to a rise in remittances.

Overseas Pakistani workers send more money to their families to meet expenses during Ramazan and Eid.

“We believe remittances would increase 19 percent YoY in FY21 to $27.6 billion given prolongation of travel restrictions amid a resurgence of COVID,” an analyst at Foundation Securities in a client note said. The government and the central bank’s initiative to attract remittances through the Roshan Digital Accounts from non-resident Pakistanis is also supporting remittances.

Read more: Pakistan's current account deficit declines to $229m in January

Analysts expect an upward trend in key non-debt creating foreign exchange inflows that are remittances to continue in the coming months, as restrictions on international travel may be extended due to the surging cases of the virus in several countries.

Most remittances from Saudi Arabia, UAE, UK, US

According to the SBP data, a large part of remittance flows in July-February 2021 came from Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States.

Inflows from Saudi Arabia, the major remittance source for the country, increased 19.5% to $5 billion in July-February 2021.

Pakistani citizens working in the UAE sent $3.9 billion in July-February, compared with $3.7 billion in the corresponding period of the last year, showing a 6% increase year-on-year.

Remittances from the UK rose 56.8% to $2.5 billion. The inflows from the US increased 46.7 %to $1.6 billion. Pakistani diaspora has defied pandemic blues with the record surge in remittances.

They travelled less to Pakistan and continued to send savings back home in the tough times of the COVID-19.