Remittances are important for economic growth of developing countries and Pakistan has been receiving significant amount of remittances. These remittances have taken off some sort of burden from the local inflows of capital. But now for the first time in 13 years, Pakistan has witnessed a decline in its remittances during the fiscal year of 2016-17.
According to the data released by the State Bank of Pakistan (SBP) remittances dropped by 3% during the fiscal year 2016-17 compared to the same period last year. During the fiscal year 2016-17, Pakistani workers sent $19.30 billion as compared to $19.91 billion last year. Remittances during the month of June, the last month of the fiscal year, dropped by 11% from $2.07 billion last year to $1.84 billion this year.
|Month||Remittances FY-17 (USD million)||Remittances FY-16 (USD million)|
First month of the current fiscal year also experienced a drop of 20% in terms of remittances. The decline in remittances at the start of the current fiscal year created panic amongst analysts and experts as they predict that Pakistan may soon face a balance of payment crisis.
The major reason for decrease in remittances during the last fiscal year was gulf economic crisis. About 63% of remittances come from Pakistanis residing in gulf countries, but due to falling crude oil prices thousands of Pakistanis working in gulf countries lost their jobs and were forced to return home resulting in decreased remittances.
Remittances from Saudi Arabia declined from $5.97 billion in FY 2016 to $5.47 billion in FY 2017. Despite the decrease in remittances, Saudi Arabia still tops the list of countries from where remittances are flowing in. Remittances share from other Gulf countries has dropped to 62.6%.