Remittance to Pakistan on Track to Break Records in 2021

Pakistan has received a record increase of approximately 17 percent, reaching a record $26.1 billion in 2020. Saudi Arabia, European Union countries, and the United Arab Emirates (UAE) have reported the greatest growth, led by the World Bank.

The number of remittances to Bangladesh, Pakistan, and Sri Lanka suggests that this growth was maintained in the first half of 2011, according to its recent 'Migration and Development Brief.'

The report showed, too, that internal remittance flows to South Asia had grown from an increase in Bangladesh and Pakistan of some 5.2 percent by 2020 to $147 billion.

In Pakistan the transfers rose by more than 17% to a record $26.1 billion, transfers from Saudi Arabia grew by over 46%, from the countries of the European Union by 25%, and the UAE by 19%. The sends also saw a sharp increase in 2020 (18.4%) in Bangladesh, and Sri Lanka had a 5.8% increase in offside goals. On the other hand, the transfers to Nepal fell by around 2%, representing a 17% decrease in the first half of 2020.

In the country, Nepal relies on 23,5% of GDP, followed by Pakistan (9,9%), and Sri Lanka with the highest dependency (8.8 percent).

The number of migrant workers from Pakistan has also decreased, mostly due to the increasing number of migrant workers from GCC countries, from 625,000 in 2019 to 225,000 in 2020. An approximate 1.2 million migrant workers in the southern Indian state of Kerala, out of over 4 million people working in GCC countries and contributing 30% of state income, were returning in 2020 after the pandemic left them unemployed. Furthermore, the poorly qualified staff were the hardest hit.

The precise number of migrant workers returning to Nepal after the start of the pandemic is not officially known. Furthermore, 65.3 percent less than last year had gone down in the first seven months of FY 2020/21 with the number of Nepalese migrant workers who had their working permits extended. In India, which is the largest recipient country in the region, remittances fell by just 0.2% in 2020, with a strong decline attributable to a 17% decline of US and other host countries' remittances that had reversed the resilient flows.

The number of payments in Pakistan grew by approximately 17%, led by Saudi Arabia's largest increase and the countries of the European Union and the UAE. In Bangladesh, transfers also saw a sharp increase of 18.4% in 2020, with a transfer rise of 5.8% in Sri Lanka.

On the other hand, sendings to Nepal decreased by approximately 2%, representing a 17% decrease in the first quarter of 2020. It is anticipated that transfers to the region will slow marginally to 3,5% in 2021 as high-income economies expand moderately and migration into the GCC countries drops expected.

The flows of refunds to Bangladesh and Pakistan are also affected by unique causes, such as the annulment of the hajj pilgrimage to Mecca, the floods in July 2020 in Bangladesh, and tax benefits for the attraction of funds.

In 2020, workers' spending in GCC nations, Malaysia, Hong Kong SAR, and China declined more than 70% from the Philippines, 68% from Bangladesh, 64% from Pakistan, and 60% from Indonesia.

In 2020, the number of foreign employees in Saudi Arabia fell sharply, leaving over 257,000 in Q3 (when a yearly total of 1.2 million return migrants were expected).

In the fourth quarter of 2020, the total cost of transferring $200 to the area was 4.9 percent, the lowest of the regions. Some of the cheapest corridors from GCC and Singapore cost less than 3 percent of the SDG target, given high volumes, dynamic markets, and technology rollout. But the prices in the largest cost corridors are well over 10 percent.

The brief observes that the remittance flows remained stable in 2020 during the pandemic and showed a smaller reduction than previously planned. The officially registered transfers to low-income countries had hit 540 billion dollars in 2020, a figure that was just 1.6 percent less than the estimate of 548 billion dollars in 2019.

The decrease in transfer flows in 2020 was lower than in the global financial crisis of 2009. (4.8 percent). It was also significantly less than the FDI flows to low- and middle-income countries fell by more than 30% in 2020, with the exception of flows to China. Via the FDI ($259 billion) and overseas development support ($179 billion) in 2020, the transfer flows to mid-and low-income countries had exceeded those of FDI ($259 billion).

The major factors for steady flow included a fiscal stimulus that culminated in a transition from cash, digital and informal, to traditional, stronger than anticipated economic conditions in host countries and a cyclical change in oil prices and currency exchange rates. Although the impact of a pandemic on informal flows is unclear, the actual size of the sendings, which includes formal and informal flows, is believed to be greater than the data reported. The report details.