Reduced remittances

Foreign remittances to Pakistan have reduced by 6.9 per cent in February 2017 with overseas Pakistani workers sending only Rs148 billion compared with the same month in 2016. The reduction is explained by analysts as having to do with low crude oil prices giving way to a global economic slowdown. It is lucky for Pakistan that its economy is on a general upward trend because foreign remittances are pertinent for the country to compensate for its deficit in goods trade. More exactingly, remittances from the Kingdom of Saudi Arabia have come to a sharp decline by over $70 million but this had to be expected as KSA has deported 39,000 Pakistani workers in the recent past, again owing to low oil prices but also security concerns. However, before lamenting ‘woe is me’, there may be an upside to this. Despite the reasons for reduced remittances cited above, this might just mean Pakistan, although in a very nascent and maybe even prenatal state, is beginning to stand on its own two feet — or, at least, it is finally being given the opportunity to rise to the challenge of standing on its own feet.

Although we are a developing nation and though some of us still harbour primitive mindsets and ideologies when it comes to societal dealings, we must change the mentality that foreign aid can always bail us out. This is not a strong foundation of a developed country. Thus, the pressure on foreign exchange reserves and reduced foreign remittances may be a blessing in disguise for the Pakistani government to solve its own financial problems instead of depending on dole-outs. This is not to be confused with foreign direct investments, which promote interest in a particular economy and positively impact the growth of that economy. Factors such as terrorism and crime in the very recent past will seek to derail foreign investor confidence and impact economic growth. All is not lost despite an overall downward remittances trend but a prudent strategy must be applied so as not to squander the funding coming in.

Published in The Express Tribune, March 13^th, 2017.

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