Remittances sent to the country by Pakistanis residing abroad are not just bringing smiles to the faces of their loved ones; amid dismal foreign investment inflows, consistently rising remittances have also got the financial managers of the country beaming.
These transfers have already become a vital pillar of macroeconomic stability and it appears that the current trend of rising remittances has held up well over recent months.
It is little wonder then that the country takes enormous pride in receiving hefty inflows sent home by overseas Pakistani, which lately crossed the $10 billion mark for first time in the countrys history after hitting a string of monthly records in the past few months.
Banking on hardworking Pakistanis, the government is expecting $11 billion in inflows till the end of the current fiscal year, in the form of remittances.
The credit for the 25 percent growth in the remittances, during the first eleven months of the current fiscal year, definitely goes to the drive initiated by the government to shift transfer of money inflows from informal to formal channels. But, overall, the pattern of growth in the countrys remittances also matches the trend witnessed in developing countries.
The best part is that the growth in the flow of remittances to Pakistan was at a higher pace of around 11 percent in 2010 compared to the 8.2 percent surge in the amount remitted by migrant workers to South Asia region in 2010, according to the World Bank.
However, in the face of sheer inflation, the net growth in remittance in local currency terms adjusted for inflation to Pakistan remained positive at around 3.7 percent in 2010, when all developing countries in the South Asia region as a whole suffered a 6.3 percent decline in net adjusted remittances.
Barring Qatar, Greece and Belgium, the remittances flow from all destinations with sizeable populations of immigrants from Pakistan, have increased in the first eleven months. The officials at Pakistan Remittance Initiative are of the view that remittance flows from European countries could be further improved by increasing banking arrangements with European banks, since lack of such facilities causes the funds to pass through multiple routes that increase both cost and delivery time.
Moreover, till now luckily, political crises in Libya, Syria and Yemen have not affected the flow of remittances to Pakistan because these countries are not among the list of major sources of remittances for the Pakistan.
But, lately, an aggressive initiative launched by Saudi Arabian government to cap work permit tenure for foreign nationals to address its own unemployment issues poses a serious threat to remittances, since remittances from Saudi Arabia account for nearly a quarter of the total remittances to the Pakistan.
Pakistans financial planners will be wary of any moves that may wipe their smiles away on this front. If the Saudi work limitations can have a significant impact on employment of Pakistanis and consequently remittances, Pakistans government would be smart to engage the Saudis on the matter soon.
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