Remittances in March have been recorded at $2.7 billion
Pakistanis living abroad sent home over $2 billion for the 10th consecutive month in March, according to information shared by the State Bank.
The money or foreign exchange overseas Pakistanis send back to Pakistan is known as workers’ remittances.
The remittances rose to $2.7 billion in March this year, which was 43% higher than compared to March last year. It is also 20% higher than the previous month of February.
In the combined nine months from July to March in the fiscal year 2021, the remittances have risen to $21.5 billion. It is 26% higher as compared to the same period of the fiscal year 2020.
“Remittances has an important role in making dollar rate fall,” said Zafar Paracha, the Exchange Companies Association of Pakistan secretary. “Remittances has been playing similar as that of exports for Pakistan.”
Increasing remittances means more foreign exchange or dollars heading into the country.
Paracha said that the increase in remittances just like exports improves general public or businesspersons’ sentiments, which in turn lowers demand for the dollar.
“The improving remittance is an important factor, which decreases demand for dollar in the country because people think that dollar rate will fall as remittances will support foreign exchange reserves,” he explained.
“Exports and remittances are the two solid sources of income for the country. Investments can come and go,” he said.
He added the falling rate of the dollar also means falling debt in rupee term for the country.
Remittance inflows during the 10-month period were mainly sourced from Saudi Arabia ($5.7 billion), United Arab Emirates ($4.5 billion), United Kingdom ($2.9 billion), and the United States ($1.9 billion).
The State Bank said that the reason behind this increase in remittances is proactive policy measures by the government and itself to encourage more inflows through formal channels.
“Moreover, limited cross border travel in the face of the COVID-19, medical expenses and philanthropical transfers to Pakistan amidst the pandemic, and orderly foreign exchange market conditions are continuing to contribute to this sustained rise in workers’ remittances,” State Bank said.
BMA Capital Executive Director Saad Hashmi said that remittances have an important role to play in Pakistan’s external account since our imports remain higher than exports but they can’t be considered equal to exports.
“You never know when countries from where Pakistan receives higher remittances change their policy,” he said. “But for exports, the country is solely responsible, and foreign countries can’t affect that and therefore they are more reliable.”
However, international sanctions and bilateral ties can affect exports as well.
Hashmi expects remittances to increase for April and May as historically remittances increase during the holy month of Ramazan.