Theme: Why remittances to Pakistan are growing
Discuss the latest incentive schemes, devaluation of the rupee and why workers need to choose the most effective ways to send money back to Pakistan.
The Way Forward For Remittances To Pakistan
Remittances to Pakistan are surging. Recent figures released by the State Bank of Pakistan (SBP) reveal a 13.4% rise in the first quarter of the fiscal year 2018-19, with Pakistan’s overseas workers sending home $5.42 billion in the period July to September 2018 compared with $4.79 during the same months in 2017.
In October 2018, the monthly figure reached $2 billion, an increase of 21% on the $1.65 remitted in October 2017, bringing the contribution from overseas workers to $7.42 billion for the months July to October. This is a 15% increase on the same period last year. If the trend continues, Pakistan remittances are predicted to top $22 billion by the end of the fiscal year.
Helping remittances to grow
Increased inflows have been prompted by the declining value of the rupee, which fell to a record low against the US dollar in October, while curbs on hundi/hawala practices (illegal operators) have encouraged workers to send money to Pakistan through legitimate banking channels and registered currency organisations.
There has also been a significant recovery in international crude oil prices in recent months, bolstering the economic position of Pakistani workers overseas and the amounts they are able to send home. However, the rise has been followed by a slump in the third quarter, so the future is uncertain. Of the estimated 10 million Pakistani expatriates, the majority are based in oil producing and exporting countries. SBP’s country data for October shows that the largest remitters are Saudi Arabia ($494.5 million) and the UAE ($412 million). The amounts remitted from these and other Gulf states are likely to fluctuate with oil prices.
A further stimulus comes from the Pakistani government, which is keen to encourage remittances to boost the country’s economy. Pakistan has always depended on the contribution of overseas workers, and the government is now drafting measures to generate more inflows. In a recent Tweet, prime minister Imran Khan said: “By removing hindrances, we will be able to increase remittance flows from $20 billion to at least $30 billion and perhaps even $40 billion.” One example is legislation to promote greater use of mobile wallets.
The best ways to transfer money
With the rupee at an historic low and the government encouraging inward flows, it is a good time to send money to Pakistan. Bank-to-bank transfer is the traditional method, but the rates aren’t the best when compared to other money transfer methods.
The cost-effective alternative is to use an International Money Transfer Organisation(IMTO) such as Xpress Money, which has a global average charge of just 2%.
This charge is three times lesser than the global average for remittances, which is presently at 6.94%, according to World Bank figures for Q3 2018.
Xpress Money has been continually supporting the money transfer needs of Pakistani expats around the world. It has established strong links with most banks in Pakistan and offers comprehensive services, which include Cash Payouts and Bank Transfers at over 11,000 agent locations in Pakistan. In addition, the IMTO provides ‘Free’ money transfers to Pakistan for amounts that are above $205 or of an equivalent value.
With remittances on the rise, and the Pakistani government now making official money transfer channels more attractive, Xpress Money has an important role to play in supporting Pakistan and its people.