Why Remittances fell 6.6% in November 2021?

 The main reason of fall seems to be the resumption of travel 

Pakistan received $2.4 billion as remittances from overseas Pakistanis in November 2021, which is 6.6% less compare to October 2021 on month to month basis. According State Bank of Pakistan (SBP) data released on December 14, the inflow of remittances had stood at $2.52 billion in October 2021.

The remittances witnessed fall of 10% from Saudi Arabia, 11.8% from UK and 9.8% from European Union. The remittances from USA, Bahrain, Qatar and Oman witnessed slight increase.  

The main reason seems to be the resumption of air travel around the world. The travel has increased as the COVID-19 cases decreased after vaccination picked up pace.

According to some experts the rise in remittances was temporary as travel restrictions forced the people to send money back home through the official channels. Now with reopening of travel, people once again started using other means to send money other than official channels.

It is not good news for already struggling Pakistani economy. The economy is already facing a huge gap between imports and exports thus causing concerns about rising current account deficit. Pakistan largely finances its trade deficit with the remittances.

The fall in remittances will increase the current account deficit if imports are not curtailed. That is really a worrying thing.    

Remittances received by the country had been on an uptrend since the COVID-19 outbreak across the globe last year due to widespread layoffs of Pakistanis in different countries, which forced them to relocate to Pakistan.

Another factor might be the economic uncertainty in Pakistan, which was discouraging the expatriates from sending huge amounts to the country. Pakistan needs economic stability to reverse the decline in remittances.

The experts also pointing out that our remittances had peaked out. Amid the global economic recovery, it is difficult to enhance remittances.

Pakistan is not the only country in the region experiencing the fall in remittances. Bangladesh is also facing the same problem.

Remittances inched up 0.6% on a year-on-year basis to $2.4 billion in November 2021 compared with $2.34 billion in the same month of last year.

“With $2.4 billion of inflows during November 2021, workers’ remittances continued their strong streak of remaining above $2 billion since June 2020,” the SBP said in a statement.

“Proactive policy measures of the government and SBP to incentivise the use of formal channels and altruistic transfers to Pakistan amid the pandemic have contributed to the sustained inflow of remittances since last year.”

According to the state Bank of Pakistan data, Pakistanis based in Saudi Arabia sent home the largest amount of remittances at $590 million in November 2021, which was 10% lower than $655.4 million in October.

The money sent home by Pakistanis working in United Arab Emirates (UAE) decreased 0.8% to $452.5 million in November 2021. Inflows from the Middle Eastern nation had amounted to $455.9 million in the prior month of October.

Overseas Pakistanis living in the United Kingdom (UK) managed to send $305.8 million in the month under review compared to $346.7 million in October, a decrease of 11.8%.

Remittances sent home by overseas Pakistanis residing in the United States climbed 2.6% as they amounted to $237.8 million in November against $231.8 million in October.

Receipts from the Gulf Cooperation Council (GCC) countries, other than Saudi Arabia and the UAE, edged up 0.3% to $286.4 million compared with $285.6 million in October.

Pakistanis in the European Union sent home 9.8% lower remittances in November 2021 as the inflows amounted to $262.5 million against $291.1 million in October 2021.

                                                                Khalid Bhatti

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