KARACHI, April 16: Workers remittances or money sent back home by overseas Pakistanis shot up to $3.10 billion in July/March 2002/03 up 101 per cent from $1.54 billion remitted in a year-ago period.
This $3.10 billion is a major chunk of total home remittances worth $3.23 billion received in the first nine months of this fiscal year. The remaining $130 million came through encashment of foreign exchange bearer certificates and foreign currency bearer certificates; Hajj remittances as well as the remittances received from the affectees of Iraq-Kuwait war of 1991. In July/March 2001/02 the country had received total home remittances of $1.62 billion.
The State Bank said in a statement on Wednesday that in March 2003 alone Pakistan got total home remittances worth $356 million up from $227 million in March 2002.
Economic managers including Finance Minister Shaukat Aziz and SBP Governor Dr. Ishrat Husain are on record saying that if the current pace of inflow continues total home remittances may cross $4 billion mark during this fiscal year. Commercial bankers who have been handling home remittances say chances for this are very bright.
Home remittances started shooting up when the United States and some other countries tightened anti-money laundering laws in the wake of the terrorist attack on twin towers of New York on September 11, 2001. Expat Pakistanis began sending back home much more money than in the past fearing a crackdown on their accounts. At the same time Pakistan introduced a law restoring for the foreign currency account holders the immunity against disclosure of the sources of income. The banks handling home remittances also revamped their system. And as the remittances started rising giving boost to foreign exchange reserves the difference between official and unofficial exchange rates disappeared. This reduced the edge the hundi operators had over banks in attracting home remittances. All this resulted in a dramatic increase in remittances through official channels.
The SBP did not give the latest country-wise breakup of home remittances but data pertaining to July/February 2002/03 shows that the largest chunk of remittances (30 per cent) came from the US followed by UAE, Saudi Arabia, UK and Kuwait. Not only the number of Pakistanis living in these countries is higher than in other countries but these are also the countries that introduced much tighter anti-money laundering laws after 9/11 than the rest of the world. The two factors combined explain the reason behind larger flows of home remittances.
Traditionally workers remittances have been the second largest source of foreign exchange earning for Pakistan after exports. The trend continues —with remittances now likely to reach not less than 40 per cent of exports. The country is expected to fetch $10 billion through exports in the current fiscal year ending in July — and home remittances are likely to close around $4 billion.
Larger inflows of home remittances have also been a primary contributor to the building up of foreign exchange reserves that have risen past $10.3 billion — from $3.2 billion before 9/11. Senior bankers handling home remittances say Pakistan has the potential to get $6-8 billion through home remittances every year if the confidence of overseas Pakistanis remains high on home economy — but more importantly if the banks and foreign exchange companies may be able to beat hundi operators in efficiency and offer better exchange rates. They say home remittances are also likely to grow if the US and other countries continue to zero in on the bank accounts of South Asian and Arab Muslims in their so- called hunt for the financiers of terrorist activities.
