Record Pak remittances to shore up national economy

Home remittances sent by Pakistanis working abroad overshot all targets and all records during fiscal year 2015, which ended on June 30, the central bank confirmed.
The officially-received amount was $18.454 billion - up 16.6 per cent, the highest ever since FY-1997 and compared to $15.837 billion in FY-2014. The target set by Ministry of Finance and the State Bank of Pakistan, or SBP, was $16.7 billion. The total inflow of $18.454 billion in FY-2015 is very close to the country's forex reserves of $18.714 billion as on July 3, which is in fact more than the SBP-owned amount. Part of this forex in reserves is owned by commercial banks.
Special cheers go overseas Pakistanis, who sent the largest-ever amount to their homeland to help it in its need. The government of Pakistan, the SBP and other banks do get a part for acceding this target. Still more cheers should go to the leadership and the government of the UAE who helped overseas Pakistanis working here as they recorded the highest growth of 35 per cent year-on-year in earning and sending their remittances. The amount sent from the UAE in FY-2015 was $4.206 billion compared to $3.10 billion in FY-2014.
Saudi Arabia was No.1 in the total amount of remittances with $5.6 billion; remittances grew 19 per cent. The growth of remittances from other GCC countries was 16 per cent and the total amount was $2.151 billion compared to $1.865 billion in FY-2014.
The Pakistani leadership and people equally appreciated the big cash received from the UAE, Saudi Arabia and other GCC countries.
"These Islamic countries stood firm and, once again, came out as our true brothers and friends in our need," Prime Minister Nawaz Sharif said.
The UAE, Saudi Arabia and the GCC region contributed 65 per cent or $11.987 billion of all inflow of home remittances.
Remittances from the United Sates totalled $2.585 billion, also higher than last year. Pakistanis sent $2.28 billion remittances from the United Kingdom, 4.9 per cent higher than FY-2014.
Remittances from the European Union, comprising 28 countries, were down to $361 million from $461 million in FY-2014. This was the only fall of the year compared to the previous one.
The remittances also witnessed the traditional surge that takes place in the holy month of Ramadan and Eid Al Fitr period as overseas Pakistanis send home more cash to meet their family requirements as well as expenses for Haj and Umrah.
Besides commercial banks receiving larger amounts of remittances, member companies of the Pakistan Foreign Exchange Association handled $4 billion in FY-2015.
While all this credit goes to Pakistanis working abroad, what did Finance Minister Ishaq Dar and the 190 million people living inside Pakistan do to shore up the economy? Three quick economic indicators to examine the situation come to mind.
One, the government failed to produce more and export more, as a result of the energy crisis and stagnating businesses. Exports are stagnating for the last three years, and fell short of the $27 billion target; the actual amount achieved was $25 billion.
Two, foreign direct investment declined 58 per cent in FY-2015 as compared to the previous year. Dar "succeeded" in accumulating high-interest foreign borrowing, loans and by sale of bonds, which will hit the country hard at the time of repayment of huge amounts of interest and the principal amounts.
Three, even after doing all these and despite a record amount of inflow of remittances, Pakistan is still facing a $2 billion current account deficit as seen in the external balances for the first 11 months of FY-2015, the SBP report showed.
What is the way forward? The undocumented, private and hundi and hawala inflows have been growing to some extent and are expected to go up further. But the fact also is that some of such inflows are turning to the official channels as easier, low-cost and faster banking facilities are now available. The easy inflow trend started in August 2009 when the SBP, the Ministry of Finance and the Ministry of Overseas Pakistanis had launched the Pakistan Remittances Initiative.
Bankers and forex-market analysts project that FY-2016 will see "the officially-recorded remittances to rise to $20 billion".
Views expressed by the writer are his own and do not reflect the newspaper's policy.