Pakistan had received $3.868 billion remittances from overseas Pakistanis


Sep 13 - 19, 2004





With the revival of the national economy, the remittances from expatriate Pakistanis have assumed role of a significant contributor to the overall economic growth of Pakistan. Since the economic growth continues to show positive signs especially the improved rate of return, stable exchange rate, improved banking services and an unattractive margin between official and open market, the financial quarters are of the view that the cash inflow from external resources would keep up the pace and likely to improve further.

Actually, it is not the patriotism, which is the driving force; in fact it is economics, which matters by and large.

It was the folly of the previous government by freezing the foreign currency accounts, which shattered the confidence of the own people in the system. The gap between official and open market rates which once had gone even to a level of Rs10 obviously a great attraction to use unofficial channels by overseas Pakistanis.

The growing profitability especially in the real estate sector, the most alluring divestment of government shares through stock exchange and a sense of insecurity to keep their savings abroad are the factors which helped accelerating the pace of inflows from abroad.

People who matter and know exactly about the potentiality of overseas Pakistanis are of the view that a fair and reliable financial regime free from cumbersome procedures, free from highhandedness of the high ups, and a sense of protection and support of the foreign missions may take the home remittances even to the tune of $10 billion a year. Overseas Pakistanis are more emotional for their country as compared to others, they are even willing to sacrifice their economic interest reasonably, however, credibility of the system at home is more important from all other factors. Pakistan is gaining a respectable place in the world financial market as well reflected in the overwhelming response to the Euro Bond and the credit rating by the international rating agencies. It is hoped that strong economic factors at home are more significant instead of the events of 9/11 in improving the situation especially in the area of home remittances.

It may be mentioned here that the net remittance from expatriate Pakistanis in the financial year 2003-04 touched a level of $3.823 billion as compared to $3.972 billion during 2002-03. Though the remittances slightly declined by $147 million or 3.7 percent as compared to the previous year due to various factors, yet there are strong indicators that the overall performance by this newly revived sector would be encouraging at the end of the year in June this year.



According to official figures Pakistan had received $3.868 billion remittances from overseas Pakistanis in the last financial year, which included $45 million that overseas Pakistanis had earned through encashment, or in profit on Foreign Exchange Bearer Certificates. Soon net remittances stood at $3.823 billion. In the year 2002-03, the country had received $4.108 billion gross remittances from expatriates including $46 million through encashment of, or profit earned on FEBCs and FCBCs. Thus net remittances had remained blow $4 billion mark at $3.972 billion.

A nominal decline of $3.7 percent in net remittances during the last fiscal year indicate that by and large Pakistan remained on course of attracting large volumes of remittances. Besides other factors which helped pushing up the pace of remittances, there is no doubt that the growing home remittances can be seen in a spirit of an acknowledgement of the economic policies and the good decisions at the home front which is itself an achievement given the fact that net remittances of $3.823 billion are in excess of the targeted amount of $3.6 billion. The remittances surpassed the target in 2003-04 despite an anticipated fall in one-time large chunks of remittances received in 2002-03 amidst post 9/11 tightening of anti-money laundering in the United States and elsewhere in the world. The remittances from the US saw no big decline in 2003-04, however the net remittances of $3.823 billion giving an impressive look to the inflows from external resources.

The remittances from the US reached $1.226 billion in the previous financial year, which were slightly down from $1.237 billion in 2002-03.

The remittances from the UAE saw a major decline of $241 million or 28.7 percent, coming down to $597 million in 2003-04 from $838 million in 2002-03. According to an assessment, the remittances from the UAE declined mainly because of some leading money changers having their networks in the UAE had started showing a big fall in the beginning of the last fiscal year but the State Bank and the Ministry of Finance did not pay much attention to it.

Remittances from Saudi Arabia and Kuwait also fell to $$565 million and $177 million respectively in 2003-04 from $581 million and $221 million in 2002-03. A fall of $16 million or 2.7 percent in remittances from Saudi Arabia is just a routine fluctuation in yearly inflows, however, the decline in remittances from Kuwait occurred because of Kuwait-Iraq war compensation payments to Pakistanis living there discontinued.

On the other hand, remittances from the UK rose to $334 million in 2003-04. This major increase in remittances from the UK can be attributed partly to a 9.6 percent depreciation of the dollar's value against sterling in July-June 2003-04, and partly increased panic driven remittances.

Remittances from Bahrain, Canada, Germany, Norway, Qatar and Oman also showed increase in 2003-04.