Legal inflows, illegal channels

The ability of a country to earn foreign exchange is the best measure of the success of economic policies adopted by the government there. Judged on this criterion, our governments have been a perennial failure. While the successive governments in our country have bitterly failed to earn dollars by attracting foreign investment and increasing exports, remittances from abroad have offered them something to boast of. The volume of expat dollars has been on a constant rise annually over the last decade and half, except for a fall once or twice during that period. From $1.46 billion in year 2003, foreign remittances — according to the World Bank — have risen to $21.08 billion in 2018, thanks to a crackdown on Hundi and Havala that was launched during the Musharraf regime.

The latest figures on remittances from abroad are in line with the trend. According to the figures released by the SBP a couple of days back, expatriate Pakistani workers remitted $11.39 billion in the first six months of the ongoing fiscal year, showing a growth of 3.31% when compared with $11.03 billion received during the same period of the previous fiscal year. And in December 2019, the inflow of remittances amounted to $2.09 billion which is 15.25% higher than in November 2019 and 20% higher than in December 2018.

The release of the figures coincides with a statement from SBP Governor Dr Reza Baqir whereby he has expressed concern over the “increasing use of informal channels” for money transfers from abroad. According to bankers and experts, an amount as big as $8 billion is received in the country annually through illegal channels like Hundi and Havala. The reasons cited by Dr Baqir for Pakistani expatriates relying more on illegal channels for money transfers seem pretty petty — comparatively higher cost of sending money through formal channels and the questions asked by banks from the senders. These irritants can be done away with without much ado.

Published in The Express Tribune, January 12^th, 2020.

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