LAHORE: The Pakistan Institute of Development Economics (PIDE) has revealed in a report that due to Covid-19 crisis and turmoil in oil market, the flow of foreign remittances to Pakistan is likely to be impacted the most.
The report, quoting the figures of State Bank of Pakistan (SBP), revealed that the remittances have declined 5pc on a quarterly basis, from $5918 million the second quarter (Oct-Dec ) to $5,626 million in the third quarter (Jan-Mar) of FY20.
Dr Nasir Iqbal, a senior economist of PIDE, informed that remittances accounted for more than 6pc of Pakistan’s GDP in 2019, adding that remittances had increased from $19.91 billion in FY18 to $21.84 billion in FY19 (9.67pc growth rate)
“With that growth, it was projected that Pakistan would receive around US$ 23 billion in FY20 and over $26 billion in FY21.”
He further informed that among the GCC countries, Saudi Arabia and the United Arab Emirates were the largest source of remittances for Pakistan, and both these countries were under a lockdown.
“It would not be wrong to assume that Pakistan will have to forego the substantial contribution of remittances to GDP,” he said. “Remittances will decline from 9pc to 14pc in the FY20.”
He continued, “The FY20 estimates indicate that the remittances will likely vary between $20,446 million and $21,789 million. We find that the remittances, based on the three scenarios, will range between $14,127 million to $22,543 million for FY21. There would be a significant decline in informal remittances that constitute around 40pc of the total remittances, due to restrictions on cross border movement of migrant workers as the flight operation is halted across the world. These restrictions would lead to at least 50pc decline in informal remittances in FY21.
He stated that the remittances were the only source of income for the families of most of the migrant workers and the loss of the remittances would be a serious threat to the well-being of millions of families in Pakistan.
“For many poor families, the loss of remittances is the loss of an important lifeline in funding and has a direct impact on nutrition, health and education outcomes.”
PIDE has also suggested that in the given scenario, the government needed to bring its diplomatic missions in motion, lobbying with the host countries to treat Pakistani workers generously, and minimise the chances of them being laid-off.
