Remitting political influence

Whether it contributed to tilting the balance in favour of the PTI would require in-depth research


Dr Pervez Tahir September 03, 2020
The writer is a senior political economist based in Islamabad. He can be reached at perveztahir@yahoo.com

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The spike in remittances from overseas Pakistanis in the month of July this year has been variously interpreted. According to the State Bank of Pakistan, the inflow of $2,768.1 million was the highest ever in a single month. The same was not claimed about the year-on-year growth of 36.5% and the month-on-month growth of 12.2%, though the year-on-year growth was twice as high as experienced around Eidul Azha in a decade. The State Bank congratulated itself, and the government, on a stable exchange rate policy, the Pakistan Remittance Initiative reducing the threshold of eligible telegraphic transfers for reimbursement of charges, increased push towards digital channels and promotion of formal channels.

Doubting Thomases in the media and the followers of the doctrine of Mammon want to wait until the next few months to see whether it is a pattern that would likely recur. A Covid-19-related global recession and the crashing oil prices in the host countries in the Gulf have led to massive job shedding, the latest ILO-compliant labour policies in Qatar notwithstanding. In this view, the inflows may well be reflecting the severance pays and benefits. The highest inflows from Saudi Arabia and the UAE of $821.6 and $538.2 million, respectively, lead to this suspicion, as does the $250.6 million inflow from the increasingly migrant-repellent United States. An exception, of course is provided by the UK, with a record inflow of $393.9 million. It may be attributable to the incentives under the construction package. There is also the complicating factor that the source country in the data is not necessarily the same as the residence of the remitter.

Scrambling for anything going up, the unreserved army of the official spokespersons, some themselves from overseas, went viral over the patriotism flowing from the surge in remittances to turn the PML-N inheritance of the gaping deficit in the current account into a surplus. It is no concern of them that deficits may be bad, but surpluses are most certainly not good in a developing economy. As for patriotism, the muted response to the Pakistan Bachao initiative has failed to open the eyes.

The PTI government is perceived to be profoundly influenced by Overseas Pakistanis. It shows in the efforts to allow them the right to vote and getting around the difficulties faced by dual nationals. The party funding case due for hearing at the Elections Commission is alleged to have the same angle. Political remittances are a known channel to influence politics in home countries. Research in other developing countries shows that closely contested elections at home attract more remittances in the belief that it would provide an edge to the party favoured by the diaspora. A cursory look at the flow of remittances in the months of elections in Pakistan leads one to suspect that this might be the case in Pakistan as well. In the election month of February in 2008, the remittances inflow of $503 million was not the highest in the year and the year-on-year increase was 10%. The elections month of May in 2013 attracted remittances of $1,186 million, again not the highest in the year and with a negative year-on-year growth. Elections held in July 2018 were by far the most contested of the three. The month received remittances of $1,556, a year-on-year increase of 14.4%. In absolute terms, this amount too was not the highest in the year. But growth of remittances in July 2018 was the highest in the three elections months. Whether it contributed to tilting the balance in favour of the PTI would require in-depth research.

Published in The Express Tribune, September 4th, 2020.

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