According to the World Bank’s Remittance Prices Worldwide Database, the average cost of sending $200 to low and middle income countries (LMICs) was 6.8 percent in the second quarter of 2019, only slightly below last quarters. This is greater than double the Sustainable Development Goal (SDG) target of 3 percent by 2030. The cost was the lowest in South Asia, at around 5 percent, while Sub-Saharan Africa continued to have the highest average cost, at about 9 percent. Remittance costs across many African corridors and small islands in the Pacific remain above 10 percent. Note that intra-regional migration in Africa is over two-thirds of all international migration from Africa – past studies have pointed out very high costs for sending money within Africa, although no recent data are available currently on such South-South remittance costs.
Banks are the costliest channel for sending remittances, with an average cost of 10.3 percent in 2019 Q2, while post offices are lowest at 5.7 percent. International experts also that remittance flows to LMICs are predicted to stand $551 billion in 2019, up by 4.7 percent as against to 2018. In 2019, in current U.S. dollar terms, the top five remittance recipient countries are projected to be India, China, Mexico, the Philippines, and Egypt. As a share of gross domestic product (GDP) for 2019, the top five recipients would be smaller economies: Tonga, Haiti, Nepal, Tajikistan, and the Kyrgyz Republic.
They also identified that growth of remittance flows slowed to 4.7 percent in 2019 as against to a robust 8.6 percent in 2018. In 2019, Latin America and the Caribbean would see the fastest pace of remittance growth at 7.8 percent because of the continued robustness of the US economy. It is also said that remittances would increase moderately in South Asia (5.3 percent), Sub-Saharan Africa (5.1 percent) and East Asia and Pacific (3.8 percent) because of the buoyancy in inflows from the US being offset by slower growth of receipts from the euro area and the GCC.
The growth rate of remittances is likely to remain weak in Middle East and North Africa (3 percent) because of structural changes, like labor market
‘nationalization’ and introduction of value added tax, in the GCC countries, and in Europe and Central Asia (1.8 percent) because of lower oil prices and ruble depreciation on outflows from Russia.
Assuming that outward remittances growth in tandem with the nominal GDP (in US dollar terms) of the source countries, these flows are projected to reach $574 billion in 2020 and $597 billion by 2021. International experts furthermore recorded that workers’ remittances have become the second foremost source of monetary flows to developing countries.
Pakistan has experienced fluctuations in economic indicators in the past that hindered the flow of workers’ remittances in the country. The State Bank of Pakistan (SBP), in its annual report for 2018/19, expects workers’ remittances to remain robust in FY20 on the back of measures taken and incentives given to overseas Pakistanis remitting under PRI. The report stated that Pakistan ranked 8th in terms of absolute remittance inflows during 2018, and in terms of growth, Pakistan’s position improved to 8th from 18th last year.
According to the State Bank of Pakistan (SBP), remittances from Pakistani workers abroad edged were recorded down 1.82 percent to $7.478 billion in the first four months of the current fiscal year. Workers’ remittances reached at $7.617 billion in the corresponding period of previous year. The fall in the remittances was driven by a slowdown in the major source countries.
Statistics showed that remittances from the United Arab Emirates declined 6.60 percent to $1.538 billion in July-October. Remittances from the United Kingdom reached at $1.143 billion in the first four months of this fiscal year, as against to $1.132 billion in the corresponding period previous year.
The SBP in its annual report for FY2018-19 identified that under the Pakistan Remittance Initiative (PRI), domestic banks, microfinance banks and exchange companies are encouraged to undertake marketing campaigns for attracting workers’ remittances. Furthermore, the Government of Pakistan facilitated the recipients by exempting from withholding tax any cash withdrawals from rupee accounts that are solely fed by foreign remittances. To make the process of the remittances transfer more secure and efficient, the Government of Pakistan was accommodative to the use of innovative technological platforms.