The ex-pats send money to Pakistan was $303 million from the United Kingdom, increasing 50% over the $201.5 million sent in January 2020. Pakistan is forecast to receive up to $28 billion in remittances this year, which would be a new high. This comes as the government’s and central bank’s initiatives to support overseas employees have begun to bear fruit amid the challenges faced by the Covid-19 pandemic.
Remittances were also boosted by limited cross-border travel due to a second wave of the coronavirus deadly virus and a flexible exchange rate regime, according to the study.
The rise in money transfers to Pakistan is due to a variety of factors, including travel restrictions and the launch of digital applications for money transfers, according to Samiullah Tariq, head of research and development at Pakistan Kuwait Financial Institution. Analysts predict that if the upward trend persists in the second half of 2021, the country will receive record remittances of up to $28 billion. During the fiscal year 2019-20, Pakistan received $23 billion in remittances.
Why Is A Money Transfer From Abroad Crucial For Developing Countries?
Remittances are amounts of money sent back to a nation by people currently employed in another country. For example, if a man from Pakistan leaves his family to work in Australia because of a better job market, he could send money back to Pakistan. Remittances are necessary for a variety of reasons.
First, online money transfers to Pakistan are often used to pay for necessities such as food and clean water and other vital services such as sending children to school. These payments allow Pakistanis to boost their human resources or value an individual may contribute to the economy.
Remittances are also an effective system for encouraging migration and opening up the labour market for job seekers. Remittances can be seen by educated Pakistanis as a kind of insurance that their families will be taken care of, making them more likely to temporarily relocate to a country with better job prospects. A smaller supply of local employees opens up job opportunities and raises salaries for those who remain in Pakistan.
The Bottom Line:
Sending money to Pakistan online from the United Kingdom and Europe, where travel regulations are more stringent, are increasingly increasing. Another critical factor is the government’s and central bank’s actions to stop illicit and informal money transfers into and out of the country to meet FATF requirements and get off the task force’s grey list.