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Remittances have also joined the worries; along with the already falling exports and declining FDI, the inflows from Pakistanis abroad - that the country has for long relied upon - are have started weakening as well. The central banks number for December 2016 show that the worker remittances have slipped by two percent year-on-year, and month-on-month.

With December 2016 data for remittances, the first half picture for FY17 is also a tumbling one where inflows from expatriates abroad came down by 2.37 percent versus 1HFY16. Compared to this, the 1HFY16 saw a growth of 5.74 percent year-on-year (i.e. versus 1HFY15).

While FDI has been depressed for long, the slowdown in exports and home remittances witnessed for over a year now, call for much more efforts to fund the current account deficit. This falling trend in remittances, FDI and exports critical for balance payment position - has also been highlighted as a challenge in State Bank of Pakistans latest quarterly review.

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The review points out that the recent decline (talking about 1QFY17) has come from a decline in inflows from all three major corridors the GCC, the US, and the UK. The share of these three key regions are shown in the illustration. The GCC has seen fiscal consolidation amid multiyear low oil prices, while the central bank states that the pounds sizable depreciation against the US dollar has affected the exchange rate, which is being reflected in the declining receipts from the UK. Also, stricter US-backed anti-money laundering/anti-terrorist financing (AML/ATF) laws for are making cross-border fund transfers cost-ineffective for global banks and money transfer operators (MTOs).

Remittance to South Asia are likely to taper down; The World Bank had too forecasted a decline of over two percent for 2016 and a slow growth in 2017. Amid such times, it is imperative that the government takes substantive action to boost the non-debt inflows including remittances, which have served as a lifeline for the countrys forex for a very long time.

Copyright Business Recorder, 2017

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