Remittances grow by 29pc in July-Nov

KARACHI: Despite 29 per cent growth recorded in remittances sent by overseas Pakistanis during the first five months (July-Nov) of the current fiscal year against the same period last year, the inflows declined comparatively in the month of November this year.

In October, the State Bank reported a 62 per cent increase in remittances against the same month of the previous year.

During the five months (July-Nov), remittances touched the figure of $3.832 billion, showing an increase of $866 million or 29.2 per cent over the same period last year.

In November, remittances were worth $742 million, which was lower than October remittances when the country received $758 million, a fall of $16 million, setting a new trend in the inflows.

SBP data showed that remittances from Middle Eastern countries either dropped or remained stagnant. Compared to October 2009, remittances from United Arab Emirates in November remained stagnant to $175 million. However, in case of Saudi Arabia, remittances dropped to $134 million in November from $142 million of October 2009.

Remittance from the US also dropped as these fell to $144 million in November from $154 million in October-09.

Remittances from GCC countries showed a downward trend but reflected a slight decline of $2 million to $109 million in November, 2009.

The only improvement was noted in remittances from the UK, which increased to $92 million in November from $80 million in October, 2009.

Remittances were still higher than the last year’s inflows, but the November figure, which was lower than Oct, 2009, could be a reflection of difficulties in the Gulf economies.

The Dubai crash, which included the biggest fall of Dubai World facing $59 billion loss, could further hamper remittances. Thousands of Pakistanis are employed or are doing business in that country.

‘No direct impact of Dubai crash was felt in Pakistan but Pakistanis living there would be affected and the collective income of the community would certainly decline,’ said a research analyst.

The country’s dependence of inflows through workers remittances has been increasing for several years but the situation is more serious in the wake of shrinking foreign direct investment and portfolio investment.

The government expects to fetch around $9 billion through remittances at the end of the current fiscal year, which would help minimise the impact of current account deficit. In 2008-09, the country received $7.8 billion remittances, while the current account deficit was $8.68 billion, which enabled the country to mitigate the negative impact of deficit through the remittances.

The low inflow of remittances would immediately impact the country’s reserves still over $13.7 billion and ultimately it would hit the exchange rate.