KARACHI, July 16: Overseas Pakistanis sent home $4.169 billion during the fiscal year 2004-2005. In the fiscal year 2003-04, they had repatriated $3.868 billion. According to data released by the State Bank, the $4.169 billion remittances include $16.5 million received through encashment of and profit earned on foreign exchange bearer certificates and foreign currency bearer certificates. Pakistanis living in the US alone sent back home $1.294 billion or more than 31 per cent of the total remittances.

The data show that Pakistanis living in Saudi Arabia and the UAE repatriated $712 million and $627 million, respectively. Pakistanis living in the UK sent home $372 million in the outgoing fiscal year.

Though the total remittances at $4.169 billion for the last fiscal year show an increase of $301 million or 7.8 per cent over the remittances of $3.868 billion a year ago, these are a bit lower than $4.23 billion remittances the country had received in the fiscal year 2002-03.

Despite a handsome $4.169 billion remittances, Pakistan is set to see an overall balance of payment deficit for the last fiscal year primarily because of a huge $6.2 billion trade deficit — almost double than the deficit recorded a year earlier.

Bankers and officials of exchange companies say that during the current fiscal year Pakistan will see further rise in remittances. Overseas Pakistanis are expected to send more of foreign exchange back home for two reasons. First, Pakistan’s economy is rising much faster than targeted, thus offering increased opportunities for them to make more investment in their home country, and second, the terrorist attack in London on July 7 would lead to further tightening of banking laws across the globe, leading many overseas Pakistanis to repatriate funds back home for safety.

As remittances from overseas Pakistanis continue to rise, the resultant expansion in the monetary base is fuelling inflation.

A $4.169 billion inflow of remittances during the last fiscal year means an increase of Rs246 billion into the banking system’s liquidity. This additional liquidity helped fuel economic growth on the one hand, but on the other hand was responsible for pushing up inflation, more so because the country is still struggling to absorb a large sum of money into its long-term productive sectors efficiently and a big chunk of it is going into consumer loans and short-term lending, which is being misused for financing hoarding of goods or indulging in speculative investment.