Pakistan remittances poised to hit record $23 billion
More than eight million overseas Pakistanis will continue to send more money back home,
Dubai - Better exchange rates, 50% devaluation on rupee would spur more inflow
Remittance inflows to Pakistan are seen to sustain an upward trend during financial year 2019-20 despite a slowdown in the global economy and a nationalisation drive in most of Gulf countries, experts said.
Analysts and experts said remittances to Pakistan may rise 5 per cent to hit another all-time high mark of $23 billion during the ongoing fiscal year despite a slight decline in inflows during the July-September 2019 quarter.
Latest data from the State Bank of Pakistan, the central bank, showed that remittances fell 1 per cent to $5.48 billion during that quarter compared to $5.56 billion in the same period last year, mainly due to a slowdown in international markets.
Analysts said more than eight million overseas Pakistan will continue to send more money back home due to better exchange rates after a massive 50 per cent currency devaluation in the past one year. However, they adopted a cautious approach and forecast a steady growth in remittance inflows in the next three quarters of fiscal year 2019-20 ending in June.
"Remittances are expected to cross the $23 billion mark in 2019-20 despite a slowdown in first quarter," Muzammil Aslam, managing director of Next Capital, told Khaleej Times.
Pakistan received a record $21.84 billion remittances in 2019-20 as overseas Pakistanis mostly based in Gulf countries continued to send money back home. Remittances have been up 16.73 per cent since 2014-15 with the leading share came from GCC countries.
Last year, Prime Minister Imran Khan expressed his willingness through tweets to facilitate overseas Pakistanis to boost remittance inflows up to $40 billion in the coming years.
"Insha Allah by removing hindrances, we will be able to increase remittance flows from $20 billion to at least $30 billion and perhaps even $40 billion through banking channels," Khan's tweet said.
Remittances from UAE down
Latest data from the central bank showed that overseas workers in the UAE remitted 7 per cent less in the July-September 2019 quarter, sending $1.14 billion against $1.23 billion in the same period last year. Overseas Pakistanis residing in Dubai remitted $750.85 million in the first quarter against $836.85 million in the similar period last year, showing a decline of 10.27 per cent.
"Remittance inflows fell due to a slowdown in international and Gulf markets, as well as a nationalisation drive in the region. Moreover, the imposition of taxes has affected savings of overseas Pakistanis in the region," Aslam said.
"Tight anti-money laundering measures and regulatory oversight have also made the process harder to send money back."
Overseas Pakistanis residing in the UAE remitted $4.62 billion during 2019-20, the second-highest figure after $5 billion received from Saudi Arabia. Pakistan traditionally received more than 50 per cent remittances from GCC countries followed by the United States and United Kingdom.
Samiullah Tariq, director of research at Karachi-based Arif Habib Limited, said remittance inflows will reach the $23 billion mark in 2019-20 despite a slight decrease in inflows in the July-September 2019 quarter.
"A drop in first-quarter remittances is not a matter of concern as it was due to Eid vacations when most of overseas Pakistanis come back to celebrate Eid in the country," Tariq told Khaleej Times.
Pakistan Business Council Dubai president Iqbal Dawood expressed his hope that Imran will succeed in reviving the Pakistani economy and economic conditions will be normalised very soon. "We should not worry with a slight decline in remittance inflows. I think slowdown in global economy is the main reason of less remittances in first quarter," he said.
Dawood said the government has successfully launched a crackdown to discourage illegal money transfers into the country and it resulted in a drastic reduction in undeclared transactions. "Hopefully, remittances will sustain an upward trend and normalise in the near future," he said.
Basir Mahmood, a Dubai-based banker, said he remitted more money to Pakistan due to better exchange rates after the devaluation of the Pakistani rupee in the past one year.
"I used to remit money for my family's monthly expenses, but recently I remitted more funds to build my dream home in the country," he said.