KARACHI: The State Bank of Pakistan (SBP) reported on Friday that the country received about $20 billion remittances in the fiscal year ended on June 30, 2016.
The remittances grew more than double when compared with $8.9bn the country received in 2009-10, an increase of almost $11bn in last six years.
The high inflows of remittances, however, were not sufficient and the government had to borrow from international lenders to bridge the foreign exchange demand gap.
The higher dollar inflows, however, helped the PML-N government to build up reserves to $23bn.
Exports growth was significantly lower than the rapid increase in imports which widened the trade gap to $17.19bn in FY15.
It was $11.4bn in FY10 highlighting the PML-N government’s failure to perk up exports or control imports using higher inflows of remittances to reduce dependence on foreign lenders. The final figures of FY16 trade deficit have yet to be released.
Exports began falling in FY11 placing pressure on the balance sheet of the country and in turn forcing the successive governments to borrow to cover up imports.
Exports in FY11 were $25.36bn, a level that could not be achieved again.
The governments failed to manage such huge inflows of remittances to contain the burden of foreign loans which require massive debt servicing.
The country paid about $6.9bn in debt servicing in FY14 and $5.4bn in FY15. It would be more in FY16 and FY17 as foreign loans have been piled up to get a better rating from the global rating agencies.
The central bank reported that remittance in fiscal year 2015-16 witnessed a growth rate of 6.38 per cent compared to previous year’s 18.2pc.
The highest amount of remittances was received from Saudi Arabia but the growth rate was just 6pc. The remittances from the kingdom in FY16 rose to $5.96bn compared to $5.6bn in FY15. The amount is about 29pc of the total remittances Pakistan received in FY16.
Second highest remittances were sent from the United Arab Emirates which rose to $4.36pc but the growth rate was just 3pc.
The remittances from United Kingdom maintained the growth rate of about 8pc with an amount of $2.57bn.
The remittances from the United States showed negative growth rate of 6.6pc, with total remittances of $2.52bn.
Published in Dawn, July 16th, 2016