Lifeline for growth
Remittances to the tune of $2 billion per month is a blessing in disguise
Ishtiaq Ali Mehkri
Pakistan’s economic lifeline is remittances from overseas workers, which has acted as a catalyst for growth and investments. It is one of the major sources of foreign exchange reserves for the country. The State Bank of Pakistan, in one of its recent reports, said that Pakistan has fared relatively better than other regional countries in terms of foreign remittances. Estimates say an average of $1.7 to $1.9 billion are received on a monthly basis, which accounts for a staggering $20 billion per annum. Most of the remittances are from the Middle East and Gulf countries, especially Saudi Arabia, UAE, and Oman. However, a silent but sizeable chunk of remittances, although on a quarterly and six-monthly basis, are also registered from the U.S., the European Union, South Africa and Australia. Many Far East Asian countries, especially Malaysia and Hong Kong, are also potential remittances pockets.
This primarily acts as seed money for the country’s balance of payments, and to a great extent compensates for lack of foreign investment and slowdown in portfolio investments. The pre-budget Economic Review of 2015-16, however, estimated that remittances can grow by 50 per cent if the government provides due incentives to its non-resident citizens, and ensures that their foreign exchange is safe and reusable in the same currency. Likewise, remittances directly deposited in Pakistani bank accounts can also get a boost and shoot up to $100 billion — a retained safe territory if stringent measures are taken and assurances on withdrawal limits are waived. The free flow of foreign currency in the form of remittances can lift the economy to new heights.
Pakistani foreign currency accounts maintained abroad are in billions of dollars, and a submission on the floor of the house said that they tune to around $800 billion. That money sooner than later should be in the mainstream of Pakistan’s conomy.
— mehkri@khaleejtimes.com
The State Bank of Pakistan, in one of its recent reports, said that Pakistan has fared relatively better than other regional countries in terms of foreign remittances.