Remittances cross $2b mark in May due to Ramazan

Enticed by a sharp slump in the rupee’s value against the dollar, Pakistanis living abroad sent home more remittances, which surged 30.17% in May 2019 over the previous month and crossed the $2-billion mark.

The arrival of Ramazan and Eid also triggered the inflow of remittances from overseas Pakistanis, helping bolster the nation’s efforts to provide cushion to a high current account deficit.

Talking to The Express Tribune, Next Capital Managing Director Muzammil Aslam said the surge in inflows was in line with expectations as the rupee fell massively last month, which was also the month of fasting. He said an increase in remittances “is witnessed every year in the holy month”.

Remittances mostly hit the highest level in Ramazan as people send money to their close relatives back home to help them cope with the swelling kitchen budget and meet expenses before Eid.

Moreover, Aslam said, the measures taken by the government to tackle the black economy, by initiating a crackdown on the Hawala and Hundi system, also reflected in May’s data. The government is currently offering an incentive of Rs2 on the receipt of each dollar.

“Moving forward, the post-Eid remittances are expected to slow down, considering the previous trends,” he added.

The remittances were up 28.36% over May 2018.

These inflows have remained a big source of foreign exchange for the government because they assist in meeting foreign expenditures mainly on two important fronts – imports and foreign debt repayment.

On a yearly basis, the remittances surged to $20.2 billion in first 11 months (July-May) of the current fiscal year, showing an increase of 10.42% over $18.3 billion in the same period of preceding year, according to data released by the State Bank of Pakistan (SBP).

Country-wise details showed that inflows in May 2019 were led by Saudi Arabia, from where Pakistani expatriates sent $493.73 million compared with inflows of $432.05 million in May 2018.

Pakistanis living in the UAE sent home $476.57 million in May compared with $373.85 million in the same month of last year; from the US, they sent $346.81 million compared to $290.26 million last year and from the UK, the inflows stood at $387.09 million compared with $269.11 million last year.

Inflows from the Gulf Cooperation Council member countries (including Bahrain, Kuwait, Qatar and Oman) amounted to $237.76 million in May 2019 compared with $178.96 million last year. From the EU countries, the expatriate Pakistanis sent $70.61 million compared with $60.34 million last year.

Remittances from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during May 2019 amounted to $303.17 million as against $199.51 million in May 2018. Aslam said the major growth in inflows was witnessed from the west as there were workers with high-end jobs. “The US and UK were the major contributors that showed a growth of over 20% in remittances to Pakistan.”