If social media is anything to go by, the new premier is the darling of Pakistan’s expat community. But love seldom comes cheap. Will the expats now shower their apparent love for the Khanate by sending more of their dollars, Euros, pounds and riyals back home? For this government, workers’ remittance will be an interesting data-point in the future to assess whether the love is indeed real.
The latest data from the State Bank of Pakistan show that expats sent home $2.037 billion in August 2018 – this is the month after the elections, in which Imran Khan’s party emerged as the leading power at the center, and in the provinces of Khyber Pakhtunkhwa and Punjab (almost). August 2018 is only the second month during which remittance of two billion dollars or more has been received – the last time it happened was back in June 2016, when $2.073 billion made their way home.
It looks as though the PTI’s victory hasn’t had much of an impact on remittances thus far. In August 2018, remittances grew 4 percent year-on-year and 6 percent month-on-month – these are the lowest growth numbers for August inflows in recent years (see illustration). Had August not been an Eid month – historically remittances get a boost in the Gregorian month associated with Eid – August remittance growth would have been flat, or even negative.
Be that as it may, remittances have averaged almost two billion dollars a month thus far this fiscal year. Can the Naya Pakistan sustain this level? The yearly growth rate, of 13.45 percent in 2MFY19, is impressive, in the context of inflows flat-lining in FY17 and FY18. Growing at this rate for the rest of the fiscal, remittances may deliver $2.6 billion higher inflows (in absolute terms) in FY19 over FY18. That will help in financing some of the trade deficit.
In the coming months, inflows may find strength if the PM’s appeal to the expat community in helping build the Diamer-Bhasha Dam is heeded to by enough non-resident Pakistanis. There are, arguably, more effective ways to tap diaspora capital, e.g. through saving certificates and diaspora bonds.
But discussing the pitfalls of overestimating diaspora’s philanthropy or generosity is not the subject of this column today. It must be noted that choosing the timing and amount of sending money home is more of a household/business decision on part of the remitter. The scale of philanthropic donations into the dam account should, therefore, make the overseas enthusiasm for Naya Pakistan apparent.
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