KARACHI: With an impressive 17.7% annual growth, remittances sent home by overseas Pakistanis surged to a record high and crossed the psychological mark of $13 billion in the previous fiscal year 2011-12, the State Bank of Pakistan (SBP) announced on Tuesday.
Continuous growth in remittances is being billed as a lifeline for Pakistan’s economy, especially when energy shortages and high inflation have hurt gross domestic product (GDP) growth.
“Remittances have been playing a key role in the country’s economic performance,” said Muzammil Aslam, Managing Director of Emerging Economics Consultancy.
“One can safely say that the continuous rise in remittances in the last few years has saved Pakistan from serious economic problems including default on debt repayments.”
Aslam suggested that the government can further increase the flow of remittances if it reduces the difference between interbank and open market exchange rates for the US dollar from the present one rupee to 10 to 15 paisa. “This will encourage overseas workers to send more and more dollars through banking channels instead of illegal means.”
Invest Capital Markets analyst Khurram Schehzad commented that the continuous rise in remittances is significantly positive for the country as the money supported the economy in different forms. Overseas Pakistani workers remitted a record amount of $13.186 billion in the last fiscal year ended June 30, 2012, compared with $11.201 billion received a year earlier, the SBP said.
Except for September ($890.42 million) and November ($924.92 million), Pakistanis remitted more than $1 billion in each of the remaining 10 months.
Monthly average of remittances rose 17.73% to $1.099 billion compared with $933.41 million a year earlier.
In June overseas Pakistanis sent home $1.117 billion compared to $1.104 billion received in the same month of 2010-11.
In the same month, remittances from Saudi Arabia, UAE, USA, UK, GCC countries and EU countries amounted to $333.68 million, $219.14 million, $206.60 million, $128.12 million, $126.72 million and $29.24 million respectively. In comparison, remittances from these countries were $291.55 million, $270.04 million, $204.64 million, $121.35 million, $106.20 million and $33.83 million respectively in June 2011.
Analysts believe that the SBP’s initiative for facilitation of remittances, called the Pakistan Remittance Initiative (PRI), has significantly contributed to the growth of remittances.
Since its inception in April 2009, PRI has taken a number of steps to enhance the flow of remittances through legal channels. These include preparation of strategies on remittances, taking all necessary steps to implement the overall strategy, playing an advisory role for the financial sector in terms of preparing a business case, relationship building with overseas correspondents, creating separate and efficient remittance payment highways and becoming a national focal point for overseas Pakistanis through a round-the-clock call centre.
Published in The Express Tribune, July 11th, 2012.