Economists noted that during the last three decades, Pakistan received a significant amount of workers’ remittances, which are sent by millions of Pakistanis working in the international markets. For capital deficient countries, like Pakistan, they have stated that workers’ remittances are considered to be a major source of foreign exchange for any economy. These remittances have an optimistic impact on our economy by enhanced balance of payments situation and reduced dependence on external borrowing. These significant flows of remittances also assisted the country recover from the adverse effects of oil price shocks, declined in the unemployment issue, and enhanced standard of living of recipient households.
Present statistics published by State Bank of Pakistan (SBP) that the remittances sent home through overseas Pakistani workers grew 12 percent to $14.35 billion in first eight months (July-February) of the current fiscal year 2018-19 because of efforts made to encourage people to send the money through proper banking channels. It is also recorded that they had sent $12.83 billion in the same period of previous fiscal year. Experts also said that the growth in remittances is in line with SBP’s projections and government’s attempts to push overseas workers to send remittances through proper legal channels. Furthermore, Pakistanis living in Western states like United States and the United Kingdom are a big source of remittances besides those living in Middle Eastern states counting Saudi Arabia and the United Arab Emirates (UAE).
It is also noted that the present Government of Pakistan had introduced a crackdown on the illegal Hawala/Hundi operators to encourage the inflow of remittances by legal channels in the country. There was no other choice with the government but to take action as unlawful operators were the source of money laundering and terror financing. The crackdown has also assisted the Government of Pakistan to meet the targets given through the Paris-based Financial Action Task Force (FATF) to tackle money laundering and terror financing. The economists also stated that workers’ remittances no doubt have become the second foremost source of monetary flows to developing states and our country has experienced fluctuations in economic indicators in the past that hindered the flow of workers’ remittances. Moreover, it is also recorded that the introduction of a mobile phone application (M-Wallet) by SBP and the use of blockchain technology to attract remittances by legal channels should discourage the unlawful practices.
The SBP officials reported that during February 2019, the inflow of worker remittances was $1.57 billion, which was 9.56 percent lower than January 2019, but 8.71 percent higher than February 2018. The country-wise statistics also showed that in February 2019 inflows from Saudi Arabia worth $370.04 million as against with $348.31 million during February 2018. The experts also recorded that people living in the UAE sent $335.66 million during February 2019 as against to $332.18 million in the corresponding month of previous year. People from the US sent home $240.80 million as against to $207.27 million, from the UK $251.99 million as compared to $201.01 million, from Gulf Cooperation Council (GCC) states (including Bahrain, Kuwait, Qatar and Oman) $152.25 million as against to $149.4 million and from European Union countries $37.71 million as compared to $48.65 million.
Statistics also showed that remittance from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other states during February 2019 are worth $188.06 million as compared to $163.35 million during February 2018. In Pakistan, many researchers revealed that majority of remitted funds were spent on consumption. Nevertheless, some evidences also revealed that significant portion of remittances were utilized into productive investment. However, a number of researchers argued that even if remittances are totally spent on consumption of imported goods and locally produced good and services, there is still benefit to the receiving states.
|Workers’ Remittances In Pakistan (Million US Dollars)|
|3 Saudi Arabia||437.48||465.53||360.16||494.53||395.12||414.84||403.92||370.04|
|5 Other GCC Country||199.30||193.17||134.49||200.87||153.51||174.52||166.50||152.25|
|6 EU Countries||64.96||59.69||41.14||57.42||42.22||47.48||42.89||37.71|
|13 Others Countries||57.98||71.56||41.45||44.64||41.74||42.19||48.44||41.12|
|II. Encashment and Profit in Pak. Rs. of Foreign Exchange Bearer Certificates (FEBCs) & Foreign Currency Bearer Certificates (FCBCs)||…||…||…||…||…||…||…||0.00|