Finance Minister Shaukat Tarin has said that increasing remittances from Pakistani diaspora is the best way to "get rid of dependence" on international lenders. "International financial institutions lend us with strings attached. We can say goodbye to them."
The government has launched Pakistan Remittance Initiative (PRI) to bring about a fundamental change in the remittance regime and double the volume of transfers in five years. The effort is aimed at encouraging remitters to use the country’s banking channel by streamlining this process to overshadow the illegal hawala system commonly preferred for being cheap and speedy. Now five banks will transfer wired amounts in the account of the receiver within 24 hours.
In March this year, Dr. Farooq Sattar, Federal Minister for Overseas Pakistanis talked about an ambitious target of $15 billion in remittances in 2009-10 while speaking to the media at the launch of a Western Union book titled "Marhaba Musafir". The book contains the basic information about the various countries where Western Union's has operations.
The remittance dollars pouring in to the nation's economy offer the much needed lifeline to the poor in the midst of multiple and serious crises confronting the people of Pakistan. Not only do these remittances dwarf the foreign loans and aid received by Pakistan, the money remitted is far more effective in helping the national economy in the following important ways:
1. Unlike foreign aid, the remittance money from overseas Pakistanis comes with no strings attached. These dollars do not serve the geopolitical interests of any foreign power. Nor are the funds used to pay for unnecessary imports or to pay expensive foreign consultants and contractors from donor countries.
2. While foreign assistance dollars are funneled through the government, the bulk of the remittance money goes directly to the people and it does not feed graft which siphons money into foreign bank accounts of corrupt politicians and bureaucrats.
3. The remittance money has a significant stimulus effect on Pakistan's economy. It invigorates the local economy because it is spent by the people to buy mostly domestic products and services that create more jobs which support more local consumption, and create even more employment opportunities.
In the United States for example, most of the food aid, including the additional $770m food aid last year, for the poor countries requires the aid recipients to purchase food from the US agribusiness. These funds do not help the farmers in the poor nations grow food for the countries to become less dependent on foreign help. The US farm lobby continues to flex its muscle and enrich itself, without regard for the severity of the hunger crisis in the poor nations resulting from sharp increase in food prices. Three years ago, farmers and their allies in Congress effectively destroyed an effort by the Bush administration to begin the switch to untied food aid. The current composition of US Congress is no different, as far as the overwhelming power of the farm lobby is concerned.
European governments switched to giving all-cash donations for food in the mid-1990s, arguing that cash allows more flexibility in responding to crises and that the U.S. uses its food aid as a form of farm subsidy. But the Europeans also continue to erect various barriers to food imports from poor nations that could improve the viability of agriculture in many Asian and African countries.
Private donations abroad by Americans, including pledges to charities and churches and disbursements from corporate foundations, now are three times as large as America's official development assistance of $20 billion, and there is every indication this trend will continue. Washington's contribution looks even more miserly when the ODA data are broken down. Here are some basic facts about US foreign assistance:
1. Less than half of aid from the United States goes to the poorest countries.
2. The largest recipients are strategic allies such as Egypt, Israel, Russia, Pakistan, Afghanistan and Iraq.
3. Israel is the richest country to receive the highest per capita U.S. assistance ($77 per Israeli compared to $3 per person in poor countries).
4. Even after the tripling of the US aid to $1.5 billion a year to Pakistan under Kerry-Lugar bill, it still amounts to about $8 per Pakistani.
According to Asia Times, last year only five of the 22 countries considered industrialized - Norway, Denmark, the Netherlands, Luxembourg and Sweden - achieved the donor benchmark of allocating 0.7% of GNP to ODA. The benchmark was adopted at the Earth Summit in Rio de Janeiro in 1992 under the UN Agenda 21 program for eradicating poverty through development assistance. No other countries have even come close to meeting the target.
France managed 0.41% of GNP last year, the United Kingdom 0.34%, Germany 0.28%, Canada 0.26%, Spain 0.25% and Australia 0.25%. Japan, the only Asian participant, came in a lowly 19th with a paltry 0.2%, maintaining a reduced ODA commitment that dates back to 2001.
Dambisa Moyo, a former economist at Goldman Sachs, and the author of "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.", recently argued in a Wall Street Journal OpEd that "money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty. Cutting off the flow would be far more beneficial."
She goes on to say, "Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.
Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."
Last year, remittances to various other Asian countries were as follows: $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labor Organization estimates.
While recognizing that there is no one silver bullet to alleviate poverty, microfinancing, along with social entrepreneurship, is becoming an essential component of non-government efforts in Pakistan and other developing nations to empower ordinary people toward self-reliance by lifting them out of poverty and teaching them the right skills to help themselves. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” This proverb has guided the efforts of late Dr. Akhtar Hameed Khan, acclaimed Pakistani social scientist and founder of Orangi Pilot Project. Supported by private foundations working in Pakistan, all efforts at alleviating poverty should be guided by this proverb that captures the essence of self-reliance.
The foreign remittances from overseas Pakistanis and private efforts are clearly helpful to the poor in the short to medium term. However, it is extremely important to recognize that the remittances alone are not sufficient for long-term economic progress based on the much needed human development that translates into a highly productive work force contributing to a vibrant national economy. It is absolutely necessary for the Pakistani state to make significant public investments in education, healthcare, infrastructure development and pursuit of good policies and competent governance in the country.
Related Links:
NRO Corruption and Democracy in South Asia
Opposition to Kerry-Lugar in Pakistan
Aid, Trade, Remittances and Microfinance
Zardari Corruption Probe
Rampant Corruption in Construction Industry
Pakistan Remittance Profile
Human Development Slipping in South Asia
Governance in Pakistan
The State, Religion and Ethnic Politics: Afghanistan, Iran and Pakistan
10 comments:
Remittances aren't really very useful from a long term economic perspective.Yes they do increase consumption at home but create prctically no long lasting benefits in the country except ofcourse to the immediate kith and kin.
Instead of remittances(which will happen anyway cause people have responsibilities at home) the government should focus on getting its oversease citizens to invest inside their economy and return to their countries with the skills and knowledge acquired abroad.
That will have a much longer lasting impact than a few dollars trickling in from here and there.
Anon: I agree that remittances are not a substitute for public investments in human development and infrastructure for long-term benefits to the nation.
The corruption of Pakistani politicians is exceeded only by their incompetence. With economy in virtual recession, the FDI is dropping as reported by The News:
Thursday, December 17, 2009
KARACHI: Net foreign investment in Pakistan fell 25.6 per cent to $1.08 billion in the first five months of the 2009/10 fiscal year compared with $1.45 billion in the same period a year earlier, the central bank said on Wednesday.
Out of total foreign investment, foreign direct investment fell 52.2 per cent to $774.0 million in the first five months of the fiscal year which began on July 1 from $1.62 billion for the same months last year, the State Bank of Pakistan said.
But foreign portfolio investment flows reversed, with a $311.3 million inflow in the July to November period compared with an outflow of $162.9 million in the same period last year.
Authorities imposed a floor on the Karachi Stock Exchange benchmark index in August last year as political uncertainty and economic and security worries drained investor confidence.
The floor discouraged new investment and also led to a sharp outflow of funds, as foreign investors sold holdings in off-market trade.
The floor was removed in December. The International Monetary Fund (IMF) saved Pakistan from a balance of payments crisis with a $7.6 billion emergency loan package in November last year. The loan was increased to $11.3 billion on July 31.
Pakistan’s economy is in virtual recession as gross domestic product growth in the 2008/09 fiscal year of 2 per cent is about the same as population growth. The IMF has projected GDP growth flat at 2 per cent this fiscal year.
Security concerns over a Taliban insurgency based in the country’s northwest and chronic power shortages have also put off investors.
Here are some excerpts from a Businessweek story on microfinance in India:
Savita Ramesh Rathore stands at the door of her dimly lit workshop in Mumbai's Dharavi slum, filled floor to ceiling with bundles of old clothes, and talks about the cost of her son's wedding last year. "Jewels, clothes, food, the town hall," says Rathore, 50, who makes towels from discarded clothes. She borrowed 30,000 rupees ($647) from moneylenders charging 60 percent interest and took additional loans from friends. Three months ago she got a 10,000-rupee loan from urban lender Hindusthan Microfinance at an interest rate of just over 20 percent to repay some of that debt.
Rathore is one of 25 million Indians who have taken so-called microfinance loans, often without adequate documentation or collateral, according to research firm Micro-Credit Ratings International. As Hyderabad-based SKS Microfinance plans to become the first microlender in the country to go public, an industry credited with helping alleviate poverty is suddenly provoking comparisons to subprime lenders in the U.S.
"Globally, microfinance is showing characteristics of the Western financial markets before the collapse," says Sanjay Sinha, managing director at Micro-Credit Ratings in Gurgaon. "In the U.S., homeowners were given loans at 120 percent of the value of their properties. In rural India, people are being lent to at 150 percent of the value of their enterprises."
Microfinance firms make loans in poor areas largely shut off from traditional banking services. The past two years have been marked by surging defaults in some countries. Microfinance markets in Nicaragua, Morocco, and Pakistan have seen default levels climb to more than 10 percent, the threshold that marks a "serious repayment crisis," according to a February report from policy and research firm Consultative Group to Assist the Poor.
India, where more than 600 million people live on less than $1.50 a day, is the world's largest microfinance market. Most microfinance loans in India range from 5,000 to 20,000 rupees ($108 to $431), with interest rates ranging from 18 percent to 33 percent. Although Indian microfinance firms have reported bad-loan ratios of about 2.5 percent on average, levels may be higher because some lenders roll over loans to struggling borrowers to avoid defaults, says Micro-Credit's Sinha.
Microfinance lending in India may surge by about 40 percent annually over the next few years, says Sinha. SKS, betting the potential for growth will attract investors, is seeking regulatory approval for an initial public offering. Basix Group, which focuses on poor households in rural areas and provides loans averaging about 3,000 rupees, may sell shares in an IPO next year, says Chairman Vijay Mahajan. Others are likely to follow. Until now, microfinance companies have relied on loans and grants from banks, insurers, and foundations for funding, he says.
Micro-Credit's Sinha worries that growth in the microfinance market is masking an erosion of lending standards that may spark rising defaults. India doesn't have a nationwide system for tracking borrowers' credit histories, making it hard for lenders to check whether clients have multiple loans. "There is significant investor interest in microfinance companies' public issues, but it's being driven by irrational exuberance," says Sinha.
Here's an ET report on record high remittances from Pakistani diaspora:
With an impressive 17.7% annual growth, remittances sent home by overseas Pakistanis surged to a record high and crossed the psychological mark of $13 billion in the previous fiscal year 2011-12, the State Bank of Pakistan (SBP) announced on Tuesday.
Continuous growth in remittances is being billed as a lifeline for Pakistan’s economy, especially when energy shortages and high inflation have hurt gross domestic product (GDP) growth.
“Remittances have been playing a key role in the country’s economic performance,” said Muzammil Aslam, Managing Director of Emerging Economics Consultancy.
“One can safely say that the continuous rise in remittances in the last few years has saved Pakistan from serious economic problems including default on debt repayments.”
Aslam suggested that the government can further increase the flow of remittances if it reduces the difference between interbank and open market exchange rates for the US dollar from the present one rupee to 10 to 15 paisa. “This will encourage overseas workers to send more and more dollars through banking channels instead of illegal means.”
Invest Capital Markets analyst Khurram Schehzad commented that the continuous rise in remittances is significantly positive for the country as the money supported the economy in different forms. Overseas Pakistani workers remitted a record amount of $13.186 billion in the last fiscal year ended June 30, 2012, compared with $11.201 billion received a year earlier, the SBP said.
Except for September ($890.42 million) and November ($924.92 million), Pakistanis remitted more than $1 billion in each of the remaining 10 months.
Monthly average of remittances rose 17.73% to $1.099 billion compared with $933.41 million a year earlier.
In June overseas Pakistanis sent home $1.117 billion compared to $1.104 billion received in the same month of 2010-11.
In the same month, remittances from Saudi Arabia, UAE, USA, UK, GCC countries and EU countries amounted to $333.68 million, $219.14 million, $206.60 million, $128.12 million, $126.72 million and $29.24 million respectively. In comparison, remittances from these countries were $291.55 million, $270.04 million, $204.64 million, $121.35 million, $106.20 million and $33.83 million respectively in June 2011.
Analysts believe that the SBP’s initiative for facilitation of remittances, called the Pakistan Remittance Initiative (PRI), has significantly contributed to the growth of remittances.
Since its inception in April 2009, PRI has taken a number of steps to enhance the flow of remittances through legal channels. These include preparation of strategies on remittances, taking all necessary steps to implement the overall strategy, playing an advisory role for the financial sector in terms of preparing a business case, relationship building with overseas correspondents, creating separate and efficient remittance payment highways and becoming a national focal point for overseas Pakistanis through a round-the-clock call centre.
http://tribune.com.pk/story/406343/remittances-surge-to-record-high/
Here's Nation's story on allocating parliamentary seats for Pakistan diaspora:
In the wake of disqualification of lawmakers holding dual nationalities by the Supreme Court of Pakistan, the All Pakistan Anjuman-e-Tajiran has called for amendments in the constitution, enabling overseas Pakistanis to be elected for parliament through reserved seats, as remittances from abroad proved a lifeline for Pakistan’s economy.The APAT urged the government as well as the opposition parties to allocate at least 10 per cent reserved seats for overseas Pakistanis in the parliament. The government will have to amend the constitution with the support of all opposition parties to facilitate those Pakistanis having dual nationality, living abroad, he said. In this way, their interest in affairs of their motherland will further increase, as remittances have been playing a key role in the economic performance of Pakistan, it observed.Continuous rise in remittances in the last few years has saved Pakistan from serious economic problems including default on debt repayments, stated general secretary Naeem Mir.He said that presently, several countries including all the seven states of South Asia, counting India as well, and Pakistan’s share has been phenomenal during 2011-12 when overseas Pakistanis sent home record $13.21 billion that eclipsed all the receipts of several decades. Pakistan has now become among top five countries of the world which are receiving big remittances from overseas workers, majority of them might have dual nationality, he added.“This goes without saying that remittances from abroad proved a lifeline for Pakistan’s economy at a time when energy shortages, high inflation and missing revenue collection targets have hurt gross domestic product (GDP) growth.” He appreciated the right of vote for the overseas, calling for their representation too in parliament, as in this way, they will turned to be the ambassadors of Pakistan. They will not only remit their income but also pursue foreign investors to make investment in Pakistan. He said that if more incentives are introduced for sending money home in easier way by overseas Pakistanis, they might send more than $20 billion remittances as experts expect. He said that except for September ($890.42 million) and November ($924.92 million) in last fiscal, Pakistanis remitted $1 billion or more in each of the remaining 10 months of 2011-12.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/22-Sep-2012/10-per-cent-seats-be-reserved-for-expats-in-na-for-more-remittances
Here's an ET report on rise in worker remittances to developing world:
Developing countries are expected to receive $406 billion in remittances in 2012, which is 6.5% higher than the remittances they received in 2011, according to a recent World Bank report.
The World Bank projects that remittances to developing countries will grow by 7.9%, 10.1% and 10.7% in 2013, 2014 and 2015 respectively, to reach $534 billion in 2015.
While the international economic downturn has adversely affected remittance flows to Europe and some other regions, South Asia is expected to fare much better than previously estimated, the report says. Remittance flows to South Asia are expected to clock in at around $109 billion in 2012, up by 12.5% over 2011, it said.
According to the State Bank of Pakistan (SBP), the country received remittances of $13.2 billion in fiscal 2012, which were 17.7% higher than the preceding fiscal year.
Similarly, in the first four months of the current fiscal year, remittances to Pakistan stood at $4.9 billion, higher by 15% compared to remittances received in the corresponding four-month period last fiscal year.
“Regions and countries with large numbers of migrants in oil-exporting countries continue to see robust growth in inward remittance flows, compared with those whose migrant workers are largely concentrated in the advanced economies, especially Western Europe,” the World Bank report says.
According to the Bureau of Emigration’s Assistant Director Farrukh Jamal, more than 80% of the manpower that Pakistan has exported resides in Saudi Arabia. “Almost 90% of recent emigrants from Pakistan currently work in the Middle East,” he told The Express Tribune in an interview two weeks ago.
The largest single-country chunk of remittances that Pakistan received in fiscal 2012 – amounting to $1.1 billion – was from Saudi Arabia. It was followed closely by the United Arab Emirates (UAE), with $963.1 million remitted from the country in the same period. The United States ($795.3 million) was the third biggest source of remittances during fiscal 2012...
http://tribune.com.pk/story/471300/expatriate-workers-increasingly-help-float-domestic-economy/
Here's a Bloomberg report on remittances helping the poor and keeping Pak economy afloat:
Living in poverty in a mud shack in Pakistan, Mazhar Ali dropped out of school, sold the family’s two buffalo and bought a visa to work in Dubai. The money he sends home is paying for a new house.
“We’re going to build three rooms with bricks and cement, plus a courtyard and a washroom,” said his younger brother Azhar in Larkana, home town of the ruling People’s Party about 300 kilometers north of Karachi. “We will then start marrying one by one, starting with Mazhar sometime this year.”
The family’s change in fortunes reflects a rising trend of rich nations with aging workers tapping poorer ones for labor -- total remittances to developing economies will rise 7.9 percent this year, and reach $534 billion by 2015, the World Bank says. For Pakistan, the income offers a source of stability, with the country poised for its first civilian handover of government in May even amid power shortages, bombings and a Taliban insurgency.
“This is our savior for keeping Pakistan out of the oxygen tent,” Farooq Sattar, former Minister for Overseas Pakistanis said in an interview in Karachi last month before his party quit the government alliance. “It has kept us from a complete economic collapse.”
Almost 10 million Pakistanis work overseas and the sum they’ve sent home has doubled in the four years through June, to a record $13 billion.
The rising tide of funds from overseas contrasts with a struggle by President Asif Ali Zardari’s administration to raise enough revenue to fund programs that would boost domestic growth. Pakistan owes the IMF $7.5 billion by 2015 and is evaluating a possible further loan from the fund as a buffer against shocks, Saleem H. Mandviwalla said in December as Finance Minister.
Falling Rupee
The local currency has fallen on concern loan repayments will erode foreign-exchange reserves, which fell to $7.5 billion in January from $11.8 billion a year earlier, according to the central bank. The rupee traded yesterday at 98.35 per dollar, near a record low, according to data compiled by Bloomberg.
Pakistan was among the 15 lowest revenue-gathering nations in the world as a percentage of GDP, according to the U.S. Central Intelligence Agency’s World Fact Book 2012. The South Asian nation recorded the highest budget deficit in two decades in the fiscal year through June as it missed its tax target.
The nation’s fiscal deficit may be 7.5 percent of gross domestic product this year, wider than the government’s target of 4.7 percent, the IMF said in January.
Among the biggest challenges for the government is the need to add almost 4,000 megawatts of power generation to end a shortage that’s causing blackouts for as long as 18 hours a day, idling factories and swelling unemployment. The government said energy shortages cut economic growth last year by as much as 4 percentage points.
Keeping Afloat
“Extreme poverty has not risen as much as it would have without remittances,” Rashid Amjad, a professor at the Lahore School of Economics said in an e-mail. “Most of the remittances are flowing into consumption, real estate, housing and the stock market, and have played a critical role in keeping Pakistan’s economy afloat.”
Pakistan will hold parliamentary elections on May 11, after the outgoing government, led by Zardari’s Pakistan Peoples Party, became the first democratically elected administration in 65 years of independence to complete its term.
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Remittances that fuel a thriving underground economy may rise further in the next few years as more Pakistanis seek employment overseas, said G.M. Arif, an economist at the Pakistan Institute of Development Economics in Islamabad.
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Some Pakistanis also use the system to avoid paying tax..
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http://www.bloomberg.com/news/2013-03-25/pakistan-s-army-of-overseas-workers-keeps-economy-from-collapse.html
#Pakistan gets remittances of $18.4b from diaspora in 2014-15, yearly increase 16.5%
http://tribune.com.pk/story/920286/pakistan-pockets-remittances-amounting-to-18-4b/ …
KARACHI: Overseas Pakistanis sent remittances amounting to $18.4 billion in 2014-15, which translates into a year-on-year increase of 16.5%, according to data released by the State Bank of Pakistan (SBP) on Monday.
Remittances amounted to $15.8 billion in the preceding fiscal year. Pakistanis based in foreign countries sent home $1.8 billion in June, which is 9.5% higher than the remittances received in the preceding month of May.
Country-wise breakdown
Inflows from Saudi Arabia were the largest source of remittances in 2014-15. They amounted to over $5.6 billion in July-June, up 19% from the preceding 12 months.
Remittances received in July-June from the United Arab Emirates (UAE) increased 35.3% to $4.2 billion on a year-on-year basis. Inflows from the UAE registered the largest increase from any major remittance-sending country during 2014-15, SBP data shows.
Remittances from the United States and the United Kingdom remained $2.6 billion and $2.3 billion, respectively, in July-June. The year-on-year increase in remittances from the US and the UK has been 4.8% and 4.9%, respectively.
Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $2.1 billion in July-June, which is 15.6% higher than the remittances received from these countries in the preceding fiscal year. Remittances from Kuwait in 2014-15 equalled $748.1 million while those from Oman, Bahrain and Qatar amounted to $666.8 million, $389 million and $347.5 million, respectively.
This means the overall share of the oil-rich GCC countries in Pakistan is almost 65%. Many analysts fear remittances from these countries may dwindle going forward as their governments begin to scale back infrastructure spending in the wake of a sharp fall in global oil prices.
Oil and Pakistan
Any major fallout of the oil price slump on the remittance inflows will be detrimental for the Pakistani economy. Absent remittances, a perennial balance of payment crisis would be inescapable, as they cover up usually around 90% of the country’s trade deficit.
“The good news is that despite the oil slump, the GCC is still spending on infrastructure … there are no short-term concerns for remittances inflows into Pakistan from this region,” the SBP said in its second quarterly report.
Saying that the GCC governments’ spending plans have not been affected by declining oil prices due to the large sovereign funds, the SBP noted the status quo may not continue “much longer”.
“A continuous depletion of these reserves would eventually start biting into their fiscal spending if oil prices fail to recover. The pace of Pakistan’s remittance growth cannot remain immune to the oil slump indefinitely,” the SBP said.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and ‘other countries’ during June amounted to $110.53 million, up 7.7% from the remittances received from these countries in the same month of 2013-14. The monthly average of remittances during 2014-15 remained $1.5 billion, up from the monthly average of remittances amounting to $1.3 billion received in July-June of 2013-14.
Remittances in the first six months of the current fiscal year increased regardless of the strong wave of political instability that began in August with sit-ins by opposition parties and fizzled out after the attack on Army Public School in December. Overseas Pakistanis sent remittances amounting to $8.98 billion in the first half of 2014-15, showing a year-on-year increase of 15.26%. Remittances had grown 13.7% in 2013-14, which means the year-on-year increase of 16.5% in 2014-15 was notably higher than preceding year.
#Pakistan ranks 8th with its 6 million strong diaspora sending $20 billion home in remittances http://www.pakistantoday.com.pk/?p=503292 via @ePakistanToday
Pakistan stands on the eight place among the top 10 recipients of remittances this year at $20.1 billion, according to a report.
According to Khaleej Times, the World Bank estimates that more than 247 million people, or 3.4 per cent of the world population, live outside their countries of birth among which more than six million are Pakistanis.
These Pakistanis, between July 2015 and January 2016, have sent an estimated $11.2 billion a marked increase of about 6 per cent compared with July 2014 to January 2015.
Overseas Pakistanis are remitting more than $1.5 billion a month, making a significant contribution to their families and bringing about a socio-economic change. The State Bank of Pakistan expects remittances to cross $20 billion this financial year, the highest ever and these expectations are in line with the World Bank’s calculations that place Pakistan on the eight rung among the top 10 recipients of remittances this year at $20.1 billion.
“The inflows from remittances (at current levels) now fully cover the country’s petroleum imports. Currently, international remittances are moving six per cent of the total GDP of Pakistan,” says Rizwan Wyne, a Pakistan-based expert on international remittances from Middle East to South Asia. The Migration and Remittance Factbook 2016 produced by the World Bank notes as of 2015 international migrants are expected to have sent $601 billion to their families in their home countries, of which developing countries like Pakistan received $441 billion.
At more than three times the size of development aid, international migrants’ remittances provide a lifeline for millions of households in developing countries. In addition, migrants hold more than $500 billion in annual savings. Together remittances and migrant savings offer a substantial source of financing for development projects that can improve lives and livelihoods in developing countries, says the report.
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