Pakistan recorded 6.4 per cent increase in remittances that hit an all-time high mark of $23.12 billion (Dh84.85 billion) during the financial year 2019-20, the latest data shows.
Analysts and experts said a steady growth in remittances to Pakistan will continue despite the worldwide economic slowdown and overseas Pakistanis may send $25 billion (Dh91.75 billion) in the present fiscal year of 2020-21.
They further said higher remittance inflows will help provide cushion to the economy, which recorded negative 0.4 per cent GDP growth during last financial year 2019-20 that ended on June 30, 2020. Pakistan envisaged one per cent economic growth for the current fiscal year.
State Bank of Pakistan, the central bank, said workers' remittances rose by 50.7 per cent during June 2020 to reach a record high of $2.466 billion compared with $1.636 billion in the same month last year.
The central bank said inflow of workers' remittances during March-June 2020 pandemic period increased 7.8 per cent compared with the corresponding period of 2019.
"Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier. Further, it is also believed that they sent remittances to support extended families and friends due to Covid-19," said the central bank.
During June 2020, larger amounts of workers' remittances are received from Saudi Arabia ($619.4 million), the United States ($452.0 million), the UAE ($431.7 million) and the UK ($401.0 million), reflecting an increase of 42 per cent, 7.1 per cent, 33.5 per cent and 40.8 per cent, respectively, compared to May 2020.
The central bank further said extension of reimbursement of TT charges scheme, which allows to send remittances free of charge to small remitters by reducing threshold from $200 to $100, also played an important role to increase inflows through official channels.
Moreover, the central bank also brought technology-based money transfer firms onboard which helped absorb the shock of lockdowns.
"Financial institutions were motivated to use effective marketing campaigns with particular focus on digital channels for sending and receiving remittances to promote the use of legal channels," said State Bank of Pakistan.
Dr Qaiser Anis, president for Pakistan Business Professional Council, Abu Dhabi, said the PTI government's decision in the latest budget not to question about the source of income from overseas Pakistanis investing in construction and housing sector created a very positive momentum for foreign funds inflows into the country.
"The Pakistani rupee has also strengthened of late against the UAE dirham and the US dollar following increased remittances. Going forward, the trend will continue at similar pace and Pakistan will attract more FDI. Remittances can go up to $25 billion," said Anis.
Iqbal Dawood, president of Pakistan Business Council, Dubai, said remittances to Pakistan stayed strong in the first 9 to 10 months of 2020 fiscal year prior to the outbreak of coronavirus pandemic.
"Since the outbreak of coronavirus, overseas Pakistani businessmen who are into small businesses such as restaurants etc are sending money back to start businesses in the home country because economic situation in the GCC and other countries is not good for the past few months. Since these businessmen are going back, they are remitting funds which resulted in increase in foreign remittances," said Dawood.
Going forward, he sees this trend of small businessmen shifting some of their investments back will continue in the coming months.
"In the latest budget, Imran Khan's government encouraged investment into construction and development sectors and offered incentives. For example, if anyone invests in these two sectors, they will not be questioned about the source of income. Therefore, remittances flow will remain steady," added Dawood.
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