August 17, 2003	Sunday	Jumadi-us-Sani 18, 1424

KARACHI, Aug 16: Pakistan received $307.23 million as home remittances in July 2003, down slightly from $307.41 million received in July 2002.

Home remittances include money sent back home by overseas Pakistanis; Haj remittances and remittances from Iraq-Kuwait war. It also includes encashment of foreign exchange bearer certificates (FEBCs) and foreign currency bearer certificates (FCBC).

The State Bank on Saturday announced the figure for home remittances received in the first month of this fiscal year without specifying how much of $307.23 million came through expatriate Pakistanis. In July 2002 the country had received $305.44 million workers remittances out of the total home remittances of $307.41 million. Whether workers’ remittances as such fell in July 2003 from that of July 2002 cannot be ascertained for the very reason that the break-up of $307.23 million home remittances is not available.

But executives of the banks handling home remittances say workers remittances have fallen slightly in July this year.

They too cannot quantify the fall but say that workers remittances fell last month as compared to July 2002 as the dollar became dearer in the open currency market once again.

The spread between the inter-bank and open market exchange rates that had gradually vanished in the wake of rising home remittances after 9/11 inched up last month to 70 paisa a US dollar.

“That may have diverted some of the workers’ remittances back into the open market,” said a local banker.

The gap between the official and open market exchange rate widened in July primarily due to currency smuggling by money changers and under-declaration of currency exports by a few foreign exchange companies. The State Bank took action against those involved in this, but by the time the SBP woke up the widening of the spread in exchange rates had taken its toll on home remittances. Thanks to the SBP action and intervention by NBP Exchange Company — a subsidiary of state-run National Bank — the spread has shrunk slightly but is still around 35 paisa a US dollar.

Bankers and officials of exchange companies say if the State Bank does not take corrective measures the gap would keep rising and that in turn would result in the banks losing part of their home remittances business to open market.

In the fiscal year 2002-03 Pakistan received $4.23bn home remittances, up from $2.38bn a year ago. Of this $4.10bn were in the shape of workers remittances — up from $2.29bn in 2001-02.