State Bank of Pakistan released the much-awaited remittances data today. Inbound remittances for Pakistan plummeted by 6% M/M and rose by 1.1% Y/Y in Apr’20. In absolute terms, remittances for April’20 stood at $1790mn. For the 10MFY20, remittances stand at $18.8bn, an increase of 6% Y/Y.
In terms of regional composition, remittances from USA registered a growth of 14% M/M. Whereas, remittances from gulf and oil producing countries declined as expected. Remittances from UAE shrank by 16% M/M, other GCC countries by 11% M/M and Malaysia by 33% M/M.
On yearly basis, remittances from USA recorded a growth of 55% in Apr’20 whereas for UK, UAE and other GCC countries they declined by 19%, 5% and 12.6%, respectively.
Decline in remittances was as per expectations given the fact that 30% of the Pakistan’s inbound remittances come from Saudi Arabia, UAE and other GCC countries. These countries were badly hit due to the oil crises and the layoff were inevitable. On the other hand, general decline in remittances was also on cards because of slowdown in economy activity due to coronavirus.
For the month of May, we believe that inbound remittances would remain flatish given the fact that most of the people return to Pakistan and spend their zakat. Incoming Eid festival might lead to increased transfers in May.
According to World Bank projections, 23% cut in Pakistan’s remittances is expected for FY20. On the contrary, government believes that World Bank’s projections are off-target and they are expecting inbound remittances for FY20 to be $20-21bn , against initial target of $24 bn. So far, $18.8bn has been received in 10M period. For government to meet its target, $2.2bn worth of remittances needs to be received in the next two months.