KARACHI: Remittances sent by overseas Pakistanis slipped on both month-on-month and annual bases in January.
The State Bank of Pakistan (SBP) reported on Friday workers’ remittances during the first seven months (July-Jan) of the fiscal year fell to $10.94 billion, down 1.87 per cent from a year ago.
Remittances did not decline notably, particularly from oil-rich Gulf countries, as was earlier predicted in the wake of falling oil prices internationally. After falling for more than 18 months, oil prices now look stable around $50 per barrel.
Thousands of Pakistanis lost their jobs in Gulf countries, particularly Saudi Arabia, but the impact on remittances from the region does not appear significant. Remittances from Saudi Arabia in the seven months slipped 5.6pc, which does not reflect the impact of the revenue loss to the kingdom following a 60pc decline in oil prices.
Pakistanis based in Saudi Arabia sent $3.17bn remittances in July-Jan against $3.36bn a year ago, showing a decline of 5.65pc. Recently, a government official said that most Pakistanis found new jobs in Saudi Arabia, which reflected in the $190-million drop in the inflows from the kingdom over the seven-month period.
However, the SBP report noted that remittances from all important and major sources recorded a decline during this period. The United States and the United Kingdom are the two main sources of inflows following Saudi Arabia, which is the single largest source of remittances for Pakistan. Both countries offered less remittances compared to a year ago. Remittances from the United States declined 9.1pc to $1.34bn in Jul-Jan. Inflows from the country have been declining for more than a year at a slow pace.
Remittances from the United Kingdom also dropped 10.56pc to $1.27bn because of the drastic devaluation in the pound’s value after Britain decided to quit the European Union. Currency experts said Pakistanis are still sending the same amount from the United Kingdom, but a smaller sum of dollars reaches Pakistan due to the devaluation in the British currency.
Remittances from the United Arab Emirates also fell 1.8pc to $2.44bn in July-Jan, showing no impact of the drop in oil prices. Remittances from other countries of the Gulf Cooperation Council (GCC) also registered a decline of 1.7pc to $1.34bn.
The SBP report said remittances in January improved 1.45pc compared to the same month of the preceding fiscal year.
Remittances did not fall notably during the current fiscal year, but inflows from other sources have been shrinking. Pakistan has not been able to grow exports besides failing to curtail its ever-increasing imports. Pakistan is also facing a decline in foreign exchange reserves, which fell $1.2bn in the last couple of weeks.
A further decline in remittances can widen the current account deficit and put pressure on the exchange rate. Pakistan depends on remittances to meet its growing trade deficit, which can be more than $20bn in the current fiscal year.
Published in Dawn, February 11th, 2017