ISLAMABAD: Declined oil prices, money service businesses, Brexit and few other factors have mainly contributed to the significant decline in home remittances in the current fiscal year. During 1st quarter of the current fiscal year, home remittances have dropped by 5.4 percent (YoY) to $4,698.31 million as compared with $4,965.81 million in Q1-FY 2015-16.
A source at the Finance Ministry told Customs Today that the decline in home remittances was mainly attributed to a number of factors, including the sharp decline in oil prices for extended period which was mainly responsible for the decline in remittances as Gulf Cooperation Council (GCC) region had a dominating share of around 63 percent in total home remittance inflows.
Specifically, the source said that remittances from Saudi Arabia declined by 8.1 percent, UAE by 5.2 percent, Bahrain by 23.3 percent and Oman by 4.1 percent during Q1-FY 2016-17 compared with Q1-FY 2015-16. Money Service Businesses (MSBs) in UK and Australia are facing problems in transferring funds due to closure of bank accounts as banks adopted wholesale de-risking policy in these jurisdictions.
“During the 1st quarter of FY 2016-17, remittances from UK declined by 18.7 percent and 9.3 percent from Australia over Q1-FY 2015-16. Another reason for decline in remittances from UK is Britain’s decision to exit from the European Union. Brexit caused a rapid fall in British round parity in terms of US dollars and Pak rupees,” the source added.
Similarly, the source said that the increased customer disclosure requirements in US had raised the compliance cost for banks/ Money Service Businesses (MSBs) led to a decline in remittances from US during the current fiscal year. Therefore, during the first Quarter of FY 2016-17, remittances from USA declined by 15.5 percent compared with QI-FY 2015-16.
However, as a result of positive growth in home remittances during the month of October 2016, cumulative decline in home remittances was recorded at 3.8 percent during the four months of FY 2016-17 (July-October) over the same period of last year. Home remittances’ share in the country’s financial reserves at the end of October, 2016 is 26.05 percent.
