The remittances sent home by overseas Pakistanis fell 6.6% month-on-month to $2.4 billion in November 2021 owing to the lifting of travel restrictions and some revival of the Hundi/ Hawala system.
According to data released by the State Bank of Pakistan (SBP) on Monday, the inflow of remittances had stood at $2.52 billion in October 2021.
Speaking to The Express Tribune, Arif Habib Commodities Chief Executive Officer and Managing Director Ahsan Mehanti was of the view that the fall in remittances was driven by the reduction in Covid cases all over the world.
“As the Covid-19 pandemic is seemingly approaching its end and travel facilities are reopening around the world, Pakistan’s remittances are falling,” he said, adding that the increase was for the short term.
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, he said.
Now, the job cuts have largely stopped because the world is on the path of recovery, hence, remittances are falling.
“Moreover, foreign travel restrictions have been lifted and people are now using alternative channels to send money back home such as Hawala/ Hundi,” he said.
Mehanti stressed that there was economic uncertainty in Pakistan, which was discouraging the expatriates from sending huge amounts to the country. He underlined the need for economic stability to reverse the decline in remittances.
Alpha Beta Core CEO Khurram Schehzad said that as economies were opening up, particularly the Middle Eastern countries, there was some possibility that the Hawala/ Hundi mode of money transfer had been reactivated.
“In addition, the end of Covid uncertainty is encouraging overseas Pakistanis to spend more and save less, so naturally they are sending smaller amounts back home,” he noted.
Furthermore, he was of the view that remittances had peaked out. “Amid the global economic recovery, it is difficult to enhance remittances.”
Echoing similar views, Ismail Iqbal Securities Head of Research Fahad Rauf said that remittances were slowing down gradually. Inflows into Bangladesh showed early correction, however, Pakistan was experiencing the correction now, he said.
“As travel facilities are reopening, remittances through informal channels are beginning to grow,” he said.
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 SBP, 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 amount sent home by expatriates in the 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.
Pakistanis in the United Kingdom 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.
Published in The Express Tribune, December 14th, 2021.