Remittances in the running

With the countrys key foreign inflow channels: such as FDI and imports drying out, the first thing comes to mind is that: Are remittance inflows bankable? Although, monthly inflows dived below $1 billon mark-the psychological level- in September and November, the inflows totalled to $6.3 billion during the first half of FY12, marking a jump of 20 percent compared to the inflows received during the same period last year. The growth level enough to appease policy makers. Volatility in monthly inflows led to a disquiet, but the cheery on the top is that average monthly inflows stood at $1.054 billion during the first half of FY12. Higher Inflows from four major destinations: Saudi Arabia, U.A.E, U.K and USA, which accounted for nearly three fourth of total inflows, contributed towards the growth. Key factors supporting growth are higher oil prices, migration and initiatives taken by the government to transfer funds through formal banking channels. The countrys remittance inflows pattern largely chimes with other Asian countries, but the overwhelming fact is that magnitude of growth is higher than that of other developing countries. The countrys remittance inflows totalled to $12.23 billion in CY11, which is close to the level expected by The World Bank, depicting a jump of around 27 percent compared to CY10. At this level the countrys remittances growth rate is starkly higher compared to that of other eight Asian developing countries: Bangladesh, China, India, Indonesia, Nepal, Sri Lanka, Vietnam, and Philippines, where the annual growth rate is ranging from 4 percent to 14 percent in CY11, according to The World Bank. . This helped the country to rank as the fifth largest recipient of remittances among developing countries in CY11. Given that its the long-term trend that counts, the recent decade data suggest that inflows to Pakistan grew by nearly 11.35 times since 2000, where the combined inflows to the other seven recipient countries grew by 5.7 times. The countrys balance of payment status signals a high dependence on remittances. But, the pace at which inflows have grown in the past few years and shown resilience, it is safe to lean on until and unless there is a significant economic and regulatory development in any of these four major remittances destination countries. Moreover, the World Bank has forecasted remittances to grow at the rate of 7-8 percent annually to reach $441 billion by 2014.