According to the press release by State Bank of Pakistan, the workers’ remittances for Pakistan increased by $551. 5 million to $20,654 during July-May FY20 compared to $20,103 million in same period FY 2019. On a MoM basis, the remittances were up by 4.6% or $82.8 million during month of May 20.
The World Bank predicted a sharp decline in global remittances by over 20% as economic crisis engulf all countries due to COVID-19 pandemic. This projected fall in remittances is based on the continuous loss of jobs, decline in payments and financial insecurities for migrant workers around the globe.
The World Bank predicted that low income and middle-income countries including Pakistan the remittances will fall by more than 19.8% or $445 billion which will leave many households vulnerable to food, finances and health insecurities.
For countries like Pakistan, the remittances form major component of growth engine and have overtaken FDIs in current account balances for past decades.
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The rise in remittances is mainly attributed to remittances from Saudi Arabia that amounted to $436.2 million followed by U.S. ($428.3 million), UAE ($323.4 million) and UK (284.8 million). There is 25.7% and 6.6% rise in remittances from UK and USA while remittances from UAE declined. The workers from Middle East including Saudi Arabia and UAE are continuously losing jobs due to the pandemic and specifically UAE that is witnessing another major economic crunch in a decade.
Compared to May 2019, there is a major decline in remittances from $2303 million to $429 million in 2020. However, highest remittances are recorded during Ramadan and last year whole month of May 2019 was Ramadan which can be a major reason for surge in remittances. The federal government is formulating strategies to invite more remittances from overseas Pakistanis to cover up for loss in remittances. The Budget 2020-21 has many incentives for overseas Pakistanis and many waivers in tax to attract FDI in real estate.
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