Stock Money exchange dirhams currency
Al Ansari money exchange, Dubai. Image Credit: Photo Virendra Saklani/Gulf News

Islamabad: Pakistanis working abroad sent home more than $2 billion for the eighth consecutive month in January, with Saudi Arabia and the UAE emerging as the biggest contributors to the remittance inflows in recent months.

Prime Minister Imran Khan said in a tweet that it was a “record” for Pakistan and thanked the diaspora for keeping the remittance lifeline flowing. The remittances in January 2021 were recorded at $2.3 billion, up by 19 per cent from a year earlier, the country’s central bank said. However, the inflows slightly decreased as compared to December 2020 when the figure touched $2.4 billion.

Top contributors in last 6 months

Pakistanis living and working in Saudi Arabia and the UAE contributed the highest inflows during FY21 (July 2020 to January 2021) amounting to $7.9b collectively. The top four countries that contributed most to the Pakistan’s recent remittance inflows in the last six months are as follows:

1. Saudi Arabia ($4.5 billion)

2. United Arab Emirates ($3.4 billion)

3. United Kingdom ($2.2 billion)

4. United States ($1.4 billion)

Overall, the workers’ remittances reached $16.5 billion during July-January FY21, registering a 24 per cent increase over same period last year, the State Bank of Pakistan (SBP) said.

Major factors

Multiple factors contributed to the continuous increase in money transfer to Pakistan. The central bank said that the sustained increase in workers’ remittances generally reflects the growing use of banking channel that is “attributed to continuous efforts by the government and SBP to attract inflows through official channels”. Financial experts say that travel restriction due to COVID-19 pandemic, the use of digital apps for transferring money and a flexible exchange rate regime also boosted remittances.

Pakistan’s crackdown on illegal money transfer channels (Hawala/Hundi) following the recommendations from the international financial watchdog, the Financial Action Task Force (FATF), is also considered crucial in keeping a record of the transactions.