Remittance Inflows Stay Above $2 Billion for Fifth Consecutive Month

[Morpheus]

Remittance Inflows Stay Above $2 Billion for Fifth Consecutive Month

Posted 5 mins ago by ProPK Staff

Pakistan received record remittances of above $2 billion from overseas workers for the fifth consecutive month in October 2020.
According to the State Bank of Pakistan (SBP), remittances sent by Pakistani expatriates amounted to $2.3 billion during October 2020, increasing by 14.1 percent compared to October 2019.

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A large part of the year-on-year increase in October 2020 was thanks to Saudi Arabia with a share of 30 percent in the overall inflows. The remittances from the United States also showed a 16 percent increase whereas the inflows from the United Kingdom grew by 14.6 percent.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities told ProPakistani,

The growth is above expectations when COVID struck. It would remain positive for the next few months due to documentation, formal channels, and some savings transfer.

Improvements in Pakistan’s FX market structure, efforts under the Pakistan Remittances Initiative (PRI) to formalize the flows, and limited cross-border traveling contributed to the growth in remittances, according to the SBP.

The government incentivized schemes such as Roshan Digital Accounts, and enhanced use of banking channels by overseas Pakistanis have played a major role in the sustained inflow of remittances.

During the period of July-October FY21, workers’ remittances increased to $9.4 billion, recording a double-digit growth of 26.5 percent compared to the same period last year.

The handsome inflows of the remittances continue to play a pivotal role in maintaining a surplus in the current account. On the other hand, the Rupee continued its unhindered climb against the dollar in recent months.

Remittance Inflows Stay Above $2 Billion for Fifth Consecutive Month

Pakistan received record remittances of above $2 billion from overseas workers for the fifth consecutive month in October 2020. According

propakistani.pk

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[Wikki019]

Remittance Inflows Stay Above $2 Billion for Fifth Consecutive Month

Posted 21 mins ago by ProPK Staff


Pakistan received record remittances of above $2 billion from overseas workers for the fifth consecutive month in October 2020.
According to the State Bank of Pakistan (SBP), remittances sent by Pakistani expatriates amounted to $2.3 billion during October 2020, increasing by 14.1 percent compared to October 2019.

A large part of the year-on-year increase in October 2020 was thanks to Saudi Arabia with a share of 30 percent in the overall inflows. The remittances from the United States also showed a 16 percent increase whereas the inflows from the United Kingdom grew by 14.6 percent.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities told ProPakistani,
The growth is above expectations when COVID struck. It would remain positive for the next few months due to documentation, formal channels, and some savings transfer.

Improvements in Pakistan’s FX market structure, efforts under the Pakistan Remittances Initiative (PRI) to formalize the flows, and limited cross-border traveling contributed to the growth in remittances, according to the SBP.

The government incentivized schemes such as Roshan Digital Accounts, and enhanced use of banking channels by overseas Pakistanis have played a major role in the sustained inflow of remittances.

During the period of July-October FY21, workers’ remittances increased to $9.4 billion, recording a double-digit growth of 26.5 percent compared to the same period last year.
The handsome inflows of the remittances continue to play a pivotal role in maintaining a surplus in the current account. On the other hand, the Rupee continued its unhindered climb against the dollar in recent months.

Remittance Inflows Stay Above $2 Billion for Fifth Consecutive Month

Pakistan received record remittances of above $2 billion from overseas workers for the fifth consecutive month in October 2020. According

propakistani.pk

 

[TheDarkKnight]

So where are all those ‘Aristotles’ who were attributing this increase only to covid-19 related layoffs in ME ( ie layed off Pakistanis sending all their savings back). The continued trend shows that the improvement is largely due to reforms and travel restrictions. The flow of money is now more through formal channels instead of illegal channels. The improvement due to the formalization even offsets the loss of income that still happened in ME due to covid 19, that is why we still endup with a positive growth despite the negative effects of Covid 19 to ME economy.

Now for the believers of “khata ha to lagata hai bhi to hai” You see a corrupt lot would never allow formalization of money flow and implementation of anti money laundering policies/laws - as they themselves have illegal/haram money to launder and smuggle. And hence for the benefit of few corrupts, the entire country suffers due to low inflow from formal channels and more flow through hawala hundi. Due to less money being exchanged through legal channels, SBP never earns those dollars - and as you may have guessed it, the govt then has to borrow more dollars to stay afloat. You want to know who these people are? Just see who was opposing FATF and anti money-laundering laws in the NA.

There is no Khair from corruption and theft - no matter what twisted logic one may present. Quran lays it out very clearly how corrupt nations were destroyed in the past.

 

[Pakistani sipahi]

So where are all those Aristotles who were attributing this increase to covid 19 related layoffs in ME( ie layed off Pakistanis sending all their savings back). The continued trend shows that the improvement is largely due to reforms and travel restrictions. The flow of money is now more through formal channels. The improvement due to the formalization even offsets the loss of income that still happened in ME due to covid 19 (that is why we still end with a positive growth despite the negative environment of Covid 19).

Now for the believers of “khata ha to lagata hai bhi hai” You see a corrupt lot would never allow formalization of money flow and implementation of anti money laundering policies/laws - as they themselves have illegal money to launder and smuggle. And hence for the benefit of few corrupts, the entire country suffers due to low inflow from formal channels and more flow through hawala hundi. Due to less money being exchanged through legal channels, SBP never earns those dollars - and as you may have guessed it, the then govt has to borrow more to stay afloat. You need evidence? Just see who was opposing FATF and anti money-laundering laws in the NA.

There is no Khair from corruption and theft - no matter what twisted logic one may present. Quran lays it out very clearly how corrupt nations were destroyed.

Agree , but my point is may be this rise because of people transferring their savings to Pakistan (Roshan digital Account) not the Salaries I guess .

 

[Baz2020]

Agree , but my point is may be this rise because of people transferring their savings to Pakistan (Roshan digital Account) not the Salaries I guess .

Roshan digital account is a major factor and very good initiative

 

[TheDarkKnight]

So what is the CAD (current acct deficit) for this month?
Using remittances figures procided here and, imports/exports figures from : https://propakistani.pk/2020/11/04/...rd-trajectory-as-trade-deficit-shrinks-by-22/

I think CAD can be calculated as:
Imports : $3.6 bln
Exports: $2.0 bln
Remittances: $2.3 bln
A surplus of: 2.0 + 2.3 - 3.6 = $0.7 bln or $700mln.

 

[aasimanwaar]

So what is the CAD (current acct deficit) for this month?
Using remittances figures procided here and, imports/exports figures from : https://propakistani.pk/2020/11/04/...rd-trajectory-as-trade-deficit-shrinks-by-22/

I think CAD can be calculated as:
Imports : $3.6 bln
Exports: $2.0 bln
Remittances: $2.3 bln
A surplus of: 2.0 + 2.3 - 3.6 = $0.7 bln or $700mln.

Not so it guess it also includes dollar ingoing/outgoing in other ways also like debt servicing.

 

[TheDarkKnight]

Not so it guess it also includes dollar ingoing/outgoing in other ways also like debt servicing.

I don't think debt payments or borrowing inflows are included in CAD.

 

[aasimanwaar]

I don't think debt payments or borrowing inflows are included in CAD.

But it surely includes net income, such as interest, dividends, profit etc.. Means total dollar vs total dollar out inmany forms.

 

[mumairb]

I want to know if the improvement seen in these remitance, industrial output, Rupee appreciation and improvements in few other sectors will have any positive impact on the GDP growth, as according to IMF Pakistan's GDP is projected to grow at 1-2% in fiscal year 2021, which is not good.

 

[Wikki019]

I don't think debt payments or borrowing inflows are included in CAD.

You are right, CAD doesn't include debt payments

 

[Patriot forever]

But it surely includes net income, such as interest, dividends, profit etc.. Means total dollar vs total dollar out inmany forms.

Current account is basically 4 things (+remittances +exports both services and goods - imports both services and goods +/- primary income credit/debit e.g. investors taking profit/money in and out or other such things ). Basically your country's expenditure vs income over a period of time be it monthly, quarter, yearly.

Total inflows vs total outflows over a period of time is reserves (SBP now gives data of change in reserves weekly) External debt payment vs external debt acquired (roll over of principal debt due, acquiring new loans to pay of interest, financing CAD etc).

(The problem Pakistan faced in 2018 was due extreme imbalance in Current account and high amounts of maturing loans our outlook/ratings was extremely poor, no one was even willing to offer us financing to roll over our debt. As a result our reserves were depleting rapidly and can barely hold us off from bankruptcy for a month or 2. We had a sever liquidity crunch in external account. It was a desperate attempt that we went flying all over the world China immediately deposited around 1-2 billion, Saudi and UAE gave us 4 billion, but it no way near to bring us out of red zone. We had no choice but to go to IMF under harsh conditions, IMF initial tranche was meager but that's not the point of going to IMF, the point was it unlocked financing from other major lenders to support our reserves and make sure we don't default/bankrupt. As a condition we had to go through tough decisions intended to stabilize our macroeconomic outlook and fix the fundamental flaw in our economy)

Next is external debt. If your total inflows are greater than total outflow e.g. apart from roll over of principal debt repayment, if additional loans acquired to pay of interest on debt, or additional financing acquired to balance your CAD. New financing acquired against development projects e.g financing for dams etc.

@aasimanwaar @mumairb @TheDarkKnight