LAHORE: As the remittances from overseas workers have started falling and a massive drop of over 25 percent reported in previous month, the Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel (BMP) has urged the government to take special initiatives and announce attractive package for overseas Pakistanis to enhance the volume of foreign inflows because this is the only hope which can support the country’s account balance.
FPCCI former president and BMP Chairman Mian Anjum Nisar observed that the development comes at a crucial time for Pakistan, which has seen its foreign exchange reserves depleted due to external debt servicing and lower inflow of dollars. According to the latest data, reserves held by the SBP decreased another $ 366 million to $ 9.72 billion, with the level staying at less than 1.5 months of import cover.
Mian Anjum Nisar said that foreign remittances flows are crucial which can support the country’s account balance amidst low volumes of foreign direct investment and nominal growth of exports. He said that overseas Pakistanis living in Gulf and Saudi Arabia should further be motivated to maintain an upward momentum in the remittances, as they contributed more than 60 percent of the total inflows during last couple of months.
He appreciated the SBP, which under its home remittances promotion measures, allowed Exchange Companies (ECs) to maintain separate foreign currency accounts for each Money Transfer Operator. In February, the government had also decided to provide an incentive of Rs 1 for each US dollar of home remittances surrendered in the inter-bank market provided that the ECs surrender 100 percent of the foreign exchange received as inward home remittances, but more solid steps are needed to stop this massive fall, he added.
Mian Anjum Nisar referred to the World Bank report, which has projected a slowdown in the remittances to Pakistan and estimated it to grow at 8 percent to $ 34 billion in 2022 compared to $ 31 billion in 2021, which grew at 20 percent.
The bank, in its report, stated that the remittance outlook for South Asia in 2023 is highly uncertain. While high-frequency data for all countries except India show growth in remittances slowing in South Asia, it is unlikely that the strong growth in remittances in South Asia in 2020 and 2021 can be sustained through 2023.
Referring to the data, he said that monthly remittances from overseas workers decreased 25.4 percent to $ 2.3 billion in May 2022 from a record high of $ 3.125 billion in April 2022. In terms of growth, the remittances decreased by 25.4 percent on a month-on-month basis and 6.9 percent on year-on-year basis. On a monthly basis, the receipts were mainly sourced from Saudi Arabia ($542 million), United Arab Emirates ($435 million), United Kingdom ($354 million) and the United States of America ($233 million). Cumulatively, at $ 28.4 billion, the remittances have grown by 6.3 percent year-on-year during the first 11 months of FY22.
During this period, expatriates in Saudi Arabia sent the largest amount at $ 7.06 billion. It was followed by the UAE with net remittances of $ 5.33 billion. The receipts from UK amounted to $ 4.03 billion while overseas Pakistanis in US sent $ 2.79 billion during the 11 months. Similarly, receipts from Gulf Cooperation Council (GCC) countries other than UAE and Saudi Arabia stood at $ 3.29 billion. Net remittances from EU countries amounted to $ 3.07 billion during July 2021 to May 2022.
Mian Anjum Nisar said the drop in remittances is disappointing despite the fact that the State Bank of Pakistan has allowed ECs to start work on directly attracting worker remittances from the countries from where the inflows remain nominal.
Copyright Business Recorder, 2022