Money sent home by overseas Pakistanis is appreciated by the government as much as by their families back home.
High growth in remittances during the last fiscal year - up 14 percent to a record of $8.9 billion - not only shouldered the countrys current account burden but also brought Pakistan in the list of major remittance receivers amongst developing economies.Initiatives such as the Pakistan Remittance Initiative must have contributed to this increase, but there are other reasons behind the remittance drive as well.
As a majority of domestic receivers are women and elderly people, the expansion of branches and ATM networks in the past few years along with technological reforms, such as higher speed and lower transfer fee have also paved way towards increasing the appeal of the formal banking channel.
In addition, in many foreign countries, primarily Gulf countries, rising concerns over terrorist financing issues have increased the frequency of crackdown on illegal money transfer channels, prompting immigrants to opt for legal channels.
As the country steps into the new fiscal year, the question arises if the growth in remittances would continue at the same pace.
So far, Pakistanis living in the UK, USA, UAE and Saudi Arabia have been sending the highest amount of money; remittances from these four destinations witnessed a surge in FY10, increasing their cumulative share to above 70 percent of the total.
Meanwhile, in the backdrop of the Dubai World financial crisis, remittances from Dubai fell by nearly 12 percent in FY10 compared to a year earlier, but this was offset by higher remittances from UAEs two major emirates Abu Dhabi and Sharjah.
This trend is seen strengthening further; the World Bank has projected that the remittance flows to developing countries, which grew by 6.2 percent in 2010, will increase by 7.1 percent in 2011.
Moreover, the presence of nearly 7 million Pakistanis living abroad, a weak rupee, and low employment opportunities at home will keep supporting overseas employment and keep remittances inflow buoyant in the foreseeable future.