As a hopeful sign, the expatriates sent money to Pakistan with continued exceptional performance and stayed above $2 billion for the 10th consecutive month in March. According to the State Bank of Pakistan’s latest data, worker remittances totalled $2.266 billion in February, up 24.2 per cent year on year. During the July-February period, they sent 24.1 per cent more money, bringing total remittances to $18.7 billion.
The increase in money transfer to Pakistan was attributed to government and SBP policy initiatives to promote inflows via formal channels, restricted cross-border travel due to Covid-19, health costs and altruistic transfers to Pakistan during the outbreak of orderly exchange market conditions, according to the central bank. Analysts predict that if the rising trend persists in the second half of the financial year, which ends on June 30, the country could receive record money transfers of up to $28 billion.
What Are The Economic Effects Of Remittance On Developing Country?
Remittances are a vital source of funding for some of the world’s poorest people, and their worth far outweighs ODA. Remittances contributed more than 10% of GDP in 24 countries and more than 20% in nine countries, according to the Migration Policy Institute. Online money transfer to Pakistan has been shown in many studies to impact poverty reduction in recipient countries positively. Remittances, unlike development assistance, go directly to the people and families who need them, and their effect is immediate.
Remittances have many beneficial positive impacts in reducing poverty and promoting economic growth by increasing household income and consumption. It also increases government tax revenues. An optimistic multiplier effect exists, which could be greater than that in other types of finance.
Remittance can also make it easier for families to obtain credit, and financial institutions such as the World Bank recognise remittance flows when determining whether or not to extend credit.
The Bottom Line:
Remittances from the United Kingdom increased by 56.8% to $2.5 billion. The amount of money coming in from the United States rose by 46.7 per cent to $1.6 billion. With a historic rise in remittances, the Pakistani diaspora has overcome the pandemic blues. During the COVID-19, they travelled less to Pakistan and continued to send money to Pakistan online.