Remittances to Pakistan hit record high due to subdued Haj spending

KARACHI, Pakistan (Reuters) - Remittances from Pakistani workers employed abroad hit the highest level for a single month in July, officials said on Monday, increasing 36.5% year on year, mostly thanks to less spending on Haj pilgrimages because of the coronavirus pandemic.

The global economic slowdown had raised fears that remittances, key to Pakistan’s dwindling foreign exchange reserves, would decline given falling employment in countries from where most of the money is sent - particularly Saudi Arabia and United Arab Emirates.

But July remittances rose to $2.768 billion, the State Bank of Pakistan said, adding the increase was up 12.2% from June, when remittance numbers were also high.

“More good news for Pakistan economy,” Prime Minister Imran Khan tweeted. “Remittances from overseas Pakistanis reached $2768 million in July 2020, highest ever amount in one month in the history of Pakistan.”

Remittances from Saudi Arabia in July amounted to $821.6 million, the United Arab Emirates $538.2 million, the United Kingdom $393.9 million and the United States, $250.6 million.

“Given the impact of COVID-19 globally, this increase in workers remittance is encouraging,” Pakistan’s central bank said in a statement.

It added that the growth rate compared to the same month in 2019 was around twice as high because of decreased spending over the Muslim Eid al-Adha season.

“Not much cash movement on flights or Haj and Umrah pilgrimages has taken place this year. This trend can continue for some months, which is a positive development for the economy,” Saad Hashemy, Executive Director BMA Capital Management, told Reuters.

Pakistan has opened all sectors of the economy in a bid to revive its hard-hit economy. The country has reported 289,215 positive COVID-19 cases of which 269,087 have recovered, with 6,175 deaths.

Reporting by Syed Raza Hassan; Editing by Nick Macfie