Remittances on the rise

Every month, all eyes are set on the foreign exchange sent home by those living abroad. Worker remittances have been the only hope for a breather to the rickety external account situation, and had it not been for the Pakistani diaspora around the world sending back their hard-earned money, economic situation would have been shoddier. Where remittances have been a delight in terms of their role in slowing down the free fall of an already depreciating currency, it has also been able to close the gap between receipts and payments of foreign exchange. It is maybe due to rising and consistent remittances that the country has been able to post high foreign exchange reserves in spite of rising import bill. With remittances crossing the psychological mark of 13 billion dollars for FY12, and a sizeable amount for the first two months, the expectations and hopes for FY13 are sky high. The receipts for FY12 grew by nearly 18 percent YoY, while the overseas Pakistani workers remitted an amount of 2.46 billion dollars during the first two months of FY13, showcasing a growth of 2.36 percent compared to the same period last year. Almost 80 percent of the repatriation grossing around 10 billion dollars during FY12 came from the big four: Saudi Arabia, UAE, USA and the UK. And this share has risen steadily from 74 percent in FY10 and 76 percent in FY11, major contributor being the growth in remittances from Saudi Arabia. Likewise, the inflows of remittances during the first two months of FY13 from the big four were again the highlight totaling to a substantial 990 million dollars. In August 2012 alone, the remittances grew by almost five percent month-on-month, while the year-on-year progress depicted a decline of four percent. The contribution from the western countries especially the European Union has either contracted or remained flat on the whole, owing to the economic rot in the region. Generally in ascendant, the foreign exchange from overseas nationals have also been bolstered gigantically by the facilitation and efforts of Pakistan Remittance Initiative in shape of its advisory role as well as its endeavour to divert the receipts through the formal channels. How long can the country rely solely on these foreign exchange inflow greatly depends on the global slowdown, the rising uncertainty in the western countries particularly in the EU and the geopolitical threat encompassing the MENA region and the GCC countries, all of which have greatly increased unemployment in these regions.