Remittances in July increase to record $2.77 billion

Remittances in Pakistan has increased to $2.77 billion in July, the highest ever level of remittances in a month.

According to the statistics released by the State Bank of Pakistan, this figure represents an ear-on-year growth of 36.5pc when compared with July 2019, and 12.2pc when compared to June 2020. Remittances were recorded at $2.47 billion last month. SBP has declared it ‘historic’ at the time.

Sources said that most of the remittances in July were received from Saudi Arabia, at $821.6 million; followed by UAE, at $538.2 million; UK, at $393.9 million; and the US, at $250.6 million.

SBP noted that the increase in remittances compared to the same month last year is around twice as high as the Eid-ul-Adha related seasonality typically experienced over the last decade.

“Given the impact of Covid-19 globally, this increase in worker’s remittances is encouraging,” the SBP said.

Experts say that people have used official channels to send remittances more than the traditional methods. This has certainly caused an increase.

Saad Hashmi, executive director of BMA Capital, said that the switch from informal to formal was the most likely reason for the rise in remittances. This was a view reiterated by Sateesh Balani, director of research at Ismail Iqbal Securities, who said, “People might be compelled to use official banking channels as flight reduction may have impacted unofficial flows.”

Experts say that people used to carry cash in luggage while traveling from Pakistan. However, they were compelled to use formal channels to send money to their families due to the cancellation of flights amid coronavirus pandemic.

Experts say that another reason behind the increase in remittances is the significant job losses in Saudi Arabia and the Gulf region due to the Covid-19 pandemic, where most Pakistani overseas labor works. Saudi Arabia was also impacted by an oil slump, leading to a loss of jobs in that sector. In July alone, more than 50,000 Pakistani workers who had lost their jobs had registered themselves with the Overseas Employment Corporation’s (OEC) portal in search of job opportunities.