KARACHI: Record growth in remittances in the last many years seems to be over. Inflows have instead started recording a year-on-year decline as they fell 3.83 per cent in the first four months of 2016-17.
Remittances grew 5.2pc during the four months of the preceding fiscal year.
The State Bank of Pakistan (SBP) reported on Thursday remittances from all important destinations declined in July-October. It indicates the fall may continue in coming months given the deteriorating economic conditions in oil-rich countries along with poor growth in the United Kingdom and the United States.
Remittances in July-Oct amounted to $6.258 billion compared to $6.507bn in the same period of the last fiscal year.
Remittances from Saudi Arabia fell 5.8pc to $1.793bn during the four months. However, they increased in October on a monthly basis.
Inflows from Saudi Arabia rose 7.4pc to $470 million from $437m in September.
However, remittances from the UK and the US fell 17pc and 13pc, respectively, in the four-month period. Pakistan received $787m from the US and $719m from the UK during the period under review.
Another important source of remittances for Pakistan is the United Arab Emirates (UAE). Inflows from the Gulf country showed a decline of 4.5pc to $1.415bn. Remittances from Dubai fell 13.5pc while they increased 18pc from Abu Dhabi.
It has been observed that the inflow of remittances has not declined to the extent that some analysts once expected. The oil-rich countries were hit by the slump in oil prices that slashed their income up to 60pc. The oil price is hovering around $42 and $45 per barrel in the international market.
Foreign exchange reserves of the country have crossed the $24bn mark. But the government fears that their outflow will be higher in the next few years when borrowings from international lenders mature. Repayments can be higher than the inflows because remittances pay the import bill. Pakistan’s trade gap is currently around $20bn a year.
The government announced on Wednesday that it would raise $500m from the international market through sukuk to meet its future debt repayment obligations.