Coronavirus impact: Remittances to Pakistan up in March, but outlook down
Overseas Pakistanis send record $17B in first 9 months of fiscal 2019-20.
Remittances to Pakistan jumped in March as well as in the first nine months of the 2019-20 fiscal year, with the UAE emerging as the fastest-growing source of remittances into the South Asian country last month, according to the latest official figures, but the outlook is dim because of the prospects of job losses as a result of the coronavirus pandemic.
The increase is attributed to uncertainty surrounding Covid-19; hence, residents and businesses remitted more to sustain their businesses in Pakistan as well as to support their families for a longer period.
In total, $16.99 billion (Dh62.35 billion) was remitted by overseas Pakistanis during July 2019 to March 2020 compared to $16.03 billion in the same period last year, an increase of $960.7 million (Dh3.52 billion) or 6 per cent year-on-year.
Remittances during March amounted to $1.89 billion against $1.73 billion in the year-ago period, registering an increase of $160.9 million or 9.3 per cent. Saudi Arabia accounted for the largest amount of worker remittances at $452.3 million, followed by the UAE at $420.4 million.
The United States was next with $352.4 million, followed by the UK with $248.5 million.
The UAE was the fastest-growing source of remittances to Pakistan month-on-month in March compared to the previous year at 8.6 per cent, followed by Saudi Arabia (7.2 per cent) and the US (5.5 per cent). The UK saw a 2 per cent decline in remittances.
Ahmed Shaikhani, vice-president of Pakistan Business Council Dubai, said remittances from the UAE and other countries surged because of both individuals and businesses remitting more funds due to uncertainty that prevailed in the region from the beginning of March with the outbreak of Covid-19. But the outlook for the next three months is bleak due to job losses in the Gulf region, which is home to a large chunk of overseas Pakistanis.
"The dirham became stronger against the rupee and helped attract more remittances to Pakistan. Plus, expats sent more funds in advance, fearing restrictions on movements or bank operations," he said.
Out of 8.8 million Pakistanis currently living overseas, the Gulf is home to nearly half of them. Saudi Arabia and the UAE is home to the largest Pakistani expat community in the region, housing nearly 2.5 million and 1.6 million, respectively.
"The impact of Covid-19 has already surpassed the 2008-09 financial crisis. The situation doesn't seem getting better in Pakistan and worldwide as well for the next three months. Therefore, the rupee will remain under pressure and foreign exchange reserves will also deplete in coming months," he said.
Irfan Afsar, former president of Pakistan Tehreek-e-Insaf, Dubai, also sees remittances going down in the months ahead due to a lot of workers becoming jobless.
"Businessmen remitted more funds because they have businesses running there in Pakistan as well and they needed funds to keep them operational. Since many people are stranded and rendered jobless here, therefore, this trend will not sustain and remittances will drop. Since there are no flights, people will be staying here and will be spending from their savings. As a result, they will remit even less, going forward," said Afsar.
"Employers have either cut salaries or sent employees on forced leave. In addition, private landlords are not giving relief to residential and commercial tenants. So this trickle-down affects will also impact individuals and businesses. As a result, it will impact saving and remittances from the UAE and the wider region," he added.
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