Remittances hit monthly record high of $2.768b in July

ISLAMABAD-Inflow of foreign remittances was recorded at historic level of $2.768 billion in July this year, showing growth of 36.5 percent due to the measures taken by federal government and State Bank of Pakistan (SBP).

Pakistan received foreign remittances worth $2.768 billion in July 20 as compared to $2.028 billion of remittances received in same month of previous year, showing an increase of 36.5 percent. This was highest ever remittances Pakistan has received in a single month, said ministry of finance on Monday. Prime Minister Imran Khan has also shared the news on Twitter. He said remittances from overseas Pakistanis reached 2,768 million dollars in July this year, which is the highest ever amount in one month in the history of Pakistan. Sharing good news about Pakistan’s economy, he said this is 12.2 percent increase over the month of June this year and 36.5 percent increase over July last year.

“The growth rate in remittances compared to the same month in the previous year is around twice as high as the Eid-ul-Adha related seasonality typically experienced over the last decade,” said SBP. It further added that several factors have likely supported the growth in remittances to date, including orderly exchange rate conditions and policy steps taken by the State Bank and the federal government under the Pakistan Remittance Initiative. These steps include reducing the threshold for eligible transactions from USD 200 to USD 100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing campaigns to promote formal channels for sending remittances.

Meanwhile, the ministry of finance said that on month-o-month basis, remittances increased by 12.2 percent in July 2020, recorded $2768.1 million ($2466.3million in June 2020). Share of remittances from Saudi Arabia 29.7 percent ($ 821.6 million), U.A.E 19.4 percent ($ 538.2 million), USA 9.1 percent ($ 250.6 million), U.K 14.2 percent ($ 393.9 million), other GCC countries 10.7 percent ($ 297 million), Malaysia 0.8 percent ($ 22.3 million), EU 8.2 percent ($ 227.6 million) and other countries 7.8 percent.

The Reimbursement of T.T. Charges Scheme is revised in March 2020 accordingly, the amount of Home Remittance transaction between USD 100/- and  USD 200/- (or equivalent in other currencies) to be reimbursed increased from Saudi Riyal (SAR) 10/- to SAR 20/-

SBP has raised the payment limits for information technology (IT) related freelance services from US$ 5,000 to US$ 25,000 per individual per month to enhance business-to-customer transactions through home remittance channel. The enhancement in limit is facilitating freelancers to increase home remittances through formal banking channels in the country. To encourage promotion of home remittances through formal channels, the performance based scheme is effective from January 01, 2020 in which, Rs. 1 per each incremental USD mobilized over 15percent growth in remittances in calendar year 2020 compared with the levels achieved in calendar year 2019. A “National Remittance Loyalty Programme” will be launched from September 1, 2020 with collaboration of major commercial banks and government agencies through which various incentives will be given to remitters through mobile apps and cards. ECC approved a technical supplementary grant of Rs.9.6 billion during the current financial year to finance the above-mentioned initiatives. In recent budget FY2021, an amount of Rs 25 billion has been allocated to improve foreign remittances through banking channels and build up foreign exchange reserves. Exemption of withholding tax on cash withdrawal or on issuance of banking instruments/transfers from a domestic bank account to the extent of remittance amount received from abroad in such account in a year.

Financial institutions were motivated to use effective marketing campaigns with particular focus on digital channels for sending and receiving remittances to promote the use of legal channels. The significant increase in remittances during July 2020 can be attributed to a number of factors including orderly exchange rate conditions and policy steps taken by the State Bank and the federal government under the Pakistan Remittance Initiative.

Due to COVID-19 economic slowdown, remittances are targeted at $21.5 billion for FY2021 but with improving situation, the government is very much hopeful that it will surpass the target.

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