Re­mit­tances on the rise

The Pak Banker - - 4editorial -

Alarge num­ber of the peo­ple of Pak­istan are work­ing in over­seas coun­tries to earn money for their self and their fam­i­lies. They are con­tribut­ing a lot to sup­port the coun­try's eco­nomic con­di­tion at a time when most of the eco­nomic in­di­ca­tors, like the bud­get deficit and in­fla­tion are show­ing wors­en­ing trends, re­mit­tances sent home by the ex­pa­tri­ates con­tinue to give much needed sup­port to the ex­ter­nal sec­tor of the coun­try. The amount send by the over­seas Pak­ista­nis stood at $926.9 mil­lion dur­ing Novem­ber, 2010 and it rises by 24.78 per­cent as com­pared to $742.9 mil­lion last year. Home re­mit­tances re­ceived dur­ing the month was the sec­ond high­est in a sin­gle month, or only about $6 mil­lion less than the his­toric amount of $933.1 mil­lion re­ceived in Au­gust, 2010. Re­mit­tances dur­ing the five months have shown a steady growth of 15.54 per­cent, reach­ing $4.43 bil­lion or $595 mil­lion more than re­ceived in the cor­re­spond­ing pe­riod last year. Healthy in­crease in the amount of re­mit­tances is more en­cour­ag­ing at a time of a global re­ces­sion when em­ploy­ment op­por­tu­ni­ties for the ex­pa­tri­ates and their earn­ing po­ten­tial are gen­er­ally shrink­ing. Present ris­ing trend in re­mit­tances could fetch the coun­try about $10.5 bil­lion dur­ing 2010-11 and con­trib­ute a great deal in re­duc­ing the cur­rent ac­count deficit to a sus­tain­able level. No doubt there is need of vig­or­ous ef­forts to en­sure the con­tin­u­a­tion of ris­ing trend in over­seas money. In this con­nec­tion, credit is gen­er­ally given to a joint ini­tia­tive by the State Bank, Min­istry of Fi­nance and Min­istry of Over­seas Pak­ista­nis, called the "Pak­istan Re­mit­tance Ini­tia­tive (PRI)," to fa­cil­i­tate the re­mit­tances. While such an ini­tia­tive may have helped to in­crease the amount of home re­mit­tances to a cer­tain ex­tent, the more po­tent fac­tors, in our view, could be the mar­ket de­ter­mined ex­change rate of­fered by the for­mal chan­nels, a crack­down on money chang­ers in­dulging in du­bi­ous busi­ness and a strin­gent mon­e­tary pol­icy that has kept the do­mes­tic in­ter­est rates at­trac­tive, rel­a­tive to the rates of re­turn avail­able in for­eign coun­tries. The govern­ment needs to monitor the sit­u­a­tion and con­tinue to im­prove the pol­icy frame­work to ex­ploit the full po­ten­tial of for­eign ex­change.

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