KARACHI: Overseas Pakistanis sent home $9.46 billion in the first half of 2016-17, down 2.37 per cent from a year ago.
According to data released by the State Bank of Pakistan (SBP) on Tuesday, remittances received in December alone amounted to $1.58bn, which reflects a decline of 2pc on both monthly and annual bases.
Remittances provide the current account balance with critical support. Inflows from overseas increased 6.4pc year-on-year to almost $20bn in 2015-16. But growth in remittances turned negative in the beginning of the current fiscal year, with the transfer of funds from the Gulf region, United States and United Kingdom registering notable declines.
The central bank has dubbed the subdued growth in remittances “the new normal”.
Over one-fourth of remittances received during the six months originated from Saudi Arabia. Inflows from Pakistani workers based in the oil-rich nation in July-Dec amounted to $2.73bn, down 5.5pc from a year ago.
The second-largest contribution to remittances was from workers based in the United Arab Emirates. They sent home $2.12bn, although the figure is 2.5pc smaller than the funds received in the same six months of the preceding year.
Remittances sent by workers based in the United States declined 10.8pc year-on-year to $1.16bn. The transfer of funds from UK-based workers remained $1.1bn, down 12.5pc from a year ago. These two countries – along with six Gulf nations, namely Saudi Arabia, UAE, Bahrain, Kuwait, Qatar and Oman — form the main corridor of remittances.
In a recent publication, the SBP blamed low international oil prices and the tightening of US-backed anti-money laundering/anti-terrorist financing laws for global correspondent banking, which is at the centre of the global remittance transfer business, for the recent disruption in the flow of funds from overseas.
As for remittances from the United Kingdom, the central bank noted the “sizable depreciation” in the British currency post-Brexit means inflows from the European nation will be lower in dollar terms even if Pakistani workers keep sending the same amount.
With regard to the decline in remittances from the Gulf countries, the SBP believes the effects of fiscal consolidation in oil-rich nations are becoming visible on the pattern of fund transfers.
Limited construction activities in the Gulf region are likely to leave a long-term impact on remittances sent by Pakistani workers. Data shows the gross number of Pakistanis who went to the Gulf countries declined 16.4pc in July-Sept last year on an annual basis.
The restrained fiscal spending in the Arab world is expected to dampen demand for low-skilled labourers, according to the SBP, whereas the “localisation requirements” will limit opportunities for high-skilled migrants.
Published in Dawn January 11th, 2017