KARACHI: Remittances sent by overseas Pakistan dropped 20 per cent year-on-year to $1.33 billion in July, the State Bank of Pakistan (SBP) said on Wednesday, as low oil prices have hit the economies of the Gulf Cooperation Council (GCC) countries resulting in loss of thousands of jobs of expatriates.
The decline was still higher at 37pc on a month-on-month basis as remittances crossed $2bn mark in June.
The oil-rich Arab countries account for almost 65pc of entire remittances sent by overseas Pakistani workers.
The fall, if persists, could be a setback for Pakistan as it largely depends on remittances to meet its foreign obligations and reserves.
Recently, the government has announced special aid for around 8,500 Pakistani workers who have stuck up in Saudi Arabia after losing their jobs.
In July, the inflow of remittances from Saudi Arabia dropped by 20pc, but it was still the highest at $379 million.
What is more concerning is the plunge in remittances from the United States and the United Kingdom as inflows from these countries fell by 33.5 and 38pc, respectively. Remittances from US and UK dropped 6pc and 8pc, respectively, in the preceding fiscal year.
Though the remittances showed a growth of 6pc in FY16, the trend was indicating that growth was under stress and that decline could start at any point. Remittances had been increasing for the last 10 years, but the recent oil price turmoil upended the situation for Pakistan which depends on these inflows to meet 50pc of its import bill.
Oil prices began to plummet in mid-2014, but the government has done nothing so far to effectively tackle the situation.
In July, remittances from the United Arab Emirates (UAE) fell by 20pc, whereas inflows from other GCC countries — excluding Saudi Arabia and UAE — dropped by 14pc. Remittances from Europe showed an increase of 9pc but the size of remittances was negligible compared to Arab countries.
Pakistan received about $20bn in remittances during the previous fiscal year.