Remittances decline by 19% Y/Y to USD 1,873mn in May’20
State Bank of Pakistan released the remittance numbers for Pakistan yesterday. Inbound Remittances registered a 5% M/M increase in May’20. On the yearly basis, remittances dipped by 19% from USD 2,302mn in May’19 to USD 1,873mn in May’20. In the 11MFY20 period, remittances increased by 3% Y/Y from USD 20.1bn to USD 20.7bn.
In terms of country composition, remittance inflows from Saudi Arabia(-12% Y/Y), UAE(-32% Y/Y), UK(-26% Y/Y) and other GCC countries(-35% Y/Y) were on a declining trend. This decline can be attributed to the slowdown in economic activity attributed to the global lockdown due to COVID-19. Furthermore, sharp decline in oil prices in last two month affected the diaspora in the gulf countries.
Government was expecting inbound remittances for FY20 to be $20-21bn , against initial target of $24bn. So far, $20.7bn has been received in 11M period. This suggest that Government has pretty much achieved its revised remittance target and its highly likely that the remittances for FY20 would exceed $21bn. But, in terms of growth remittance inflows have only grown by 3% Y/Y in 11MFY20.
For the FY21, government has announced removal of WHT on the foreign remittances and alongside that SBP will be launching multiple schemes to encourage remittances through formal channels. This can positively impact the remittances inflow in the FY21 but again that would highly hinge on how the global pandemic situation plays out in the upcoming months.