KARACHI: Remittances sent home by overseas Pakistani workers slowed down by a massive $400 million, or 20%, to $1.6 billion in November 2018, the State Bank of Pakistan (SBP) reported on Monday.
This will pile pressure on the rupee against the US dollar and will further undermine the country’s capacity to make international payments, according to analysts.
Remittances stood at $2 billion in the previous month of October 2018.
“The slowdown in remittances has increased pressure on the balance of payments as the country’s foreign currency reserves have already gone down to critically low levels that cover only one and a half month of imports,” Sherman Securities’ analyst Chander Kumar told The Express Tribune.
Reserves stood at around four-and-a-half-year low of $7.5 billion on November 30, 2018.
“With this unexpected drop in remittances, the challenge of narrowing down the current account deficit seems difficult to address (in the short run),” he said. “Remittances play a significant role in containing the deficit and stabilising the balance of payments.”
Kumar said they were expecting a little bit lower remittances in November 2018 since Pakistanis had send significantly higher remittances in the prior month apparently due to a fresh round of rupee depreciation against the dollar.
“October’s remittances were at one of the high levels…and these were not expected to touch such a peak again in any month in the remaining part of the year (FY19),” he said.
With the fresh data, average monthly remittances for first five months (July-November) of the current fiscal year dropped to $1.8 billion, indicating that the country would miss the target of around $22 billion for FY19, he said.
“Remittances are expected to stay low due to economic slowdown around the world,” he added.
Citing low international crude oil prices, he said Pakistan’s imports would remain on the lower side and would partly ease the pressure emerging in the wake of slowdown in remittances on the current account and balance of payments.
Cumulatively, in the first five months of FY19, remittances from overseas Pakistani workers increased 12.56% to $9.02 billion compared with $8.02 billion in the same period of previous year, the SBP said.
Country-wise details for November 2018 showed that remittances from Saudi Arabia dropped to $395.12 million compared with $409.52 million in November 2017.
Remittances from the UAE decreased to $343.21 million compared with $352.64 million in November 2017 whereas from other Gulf Cooperation Council (GCC) countries, which included Bahrain, Kuwait, Qatar and Oman, remittances dropped to $151.37 million compared with $191.83 million.
From EU countries, remittances shrank to $42.18 million compared with $49.06 million last year.
However, remittances from the US increased to $255.78 million compared with $204.28 million last year and from the UK, they increased to $228.19 million from $213.47 million.
From Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries, remittances rose to $192.74 million compared with $155.92 million in November 2017, according to the central bank.
Around 10 million Pakistanis are working overseas while a majority of them are based in oil-producing and exporting countries in the Gulf.