KARACHI, July 15: Net remittances from expatriate Pakistanis in fiscal year July-June 2003-04 reached $3.823 billion, slightly down from $3.972 billion in fiscal year 2002-03, showing a decline of $147 million or 3.7 per cent only.

Data released by the State Bank shows that Pakistan received $3.868 billion remittances from overseas Pakistanis in the outgoing fiscal year. But the amount included $45 million that overseas Pakistanis had earned through encashment or in profit on Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates.

So, net remittances stood at $3.823 billion. In 2002-03, the country had received $4.108 billion gross remittances from expatriates including $46 million through encashment of, or profit earned on FEBCs and FCBCs. Thus net remittances had remained below $4 billion mark at $3.972 billion.

A nominal decline of 3.7pc in net workers' remittances during the last fiscal year indicates that by and large Pakistan remained on course of attracting large volumes of remittances.

Admittedly, this itself is an achievement given the fact that net remittances of $3.823bn are in excess of the targeted amount of $3.6bn. The remittances surpassed the target in 2003-04 despite an anticipated fall in one-time large chunks of remittances received in 2002-03 amidst post 9/11 tightening of anti-money laundering in the US and elsewhere in the world.

This coupled with the fact that remittances from the US saw no big decline in 2003-04 makes the net remittances of $3.823bn look more impressive. The remittances from the US reached $1.226 billion in the outgoing fiscal year down slightly from $1.237 billion in 2002-03.

The remittances from the UAE saw a major decline of $241 million or 28.7 per cent, coming down to $597 million in 2003-04 from $838 million in 2002-03. It would be inappropriate to link such a large fall in remittances to the fact that one-time inflows triggered by post 9/11 tightening of anti-money laundering rules slowed down in the outgoing fiscal year.

What weakens this argument is that remittances from the US itself showed a negligible fall of $11 million or 0.9 per cent. Bankers and executives of exchange companies say that the remittances from the UAE fell primarily because some leading money changers having their networks in the UAE encouraged illegal transfer of money from that country to Pakistan.

The more disturbing aspect of this issue is that the remittances from the UAE had started showing a big fall in the beginning of the last fiscal year but the State Bank and the Ministry of Finance did not pay much attention to it.

Remittances from Saudi Arabia and Kuwait also fell to $565 million and $177 million respectively in 2003-04 from $581 million and $221m in 2002-03. A fall of $16 million or 2.7 per cent in remittances from Saudi Arabia is just a routine fluctuation in yearly inflows.

But a $44m or 20 per cent decline in remittances from Kuwait occurred primarily because Kuwait-Iraq war compensation payments to Pakistanis living there discontinued.

On the other hand, remittances from the UK rose to $334m in 2003-04 up $60m or 22pc from $274m in 2002-03. This major buildup in remittances from the UK can be attributed partly to a 9.6pc depreciation of the dollar's value against sterling in July-June 2003-04, and partly to increased panic-driven remittances. Remittances from Bahrain, Canada, Germany, Norway, Qatar and Oman also showed increase in 2003-04.