KARACHI, Dec 16: Workers' remittances or the foreign exchange sent back home by overseas Pakistanis reached $1.607 billion in July-November 2004, up from $1.463, data released by the State Bank show.

This means that the country received a monthly average of $320 million from expatriate Pakistanis in the first five months of this fiscal year. If they continue to send back home the same amount of foreign exchange in the remaining seven months, Pakistan's foreign exchange earning through remittances would reach $3.840 billion during this fiscal year.

But senior bankers say remittances will touch $4 billion because a narrow gap between inter-bank and open market exchange rates will serve as an incentive for overseas Pakistanis to use official channels for remitting foreign exchange back home.

Workers' remittances are the second largest source of foreign exchange earning, after exports. The country has projected exports to rise to $13.7 billion during this fiscal year.

In the first five months, exports, however, totalled $5.371 billion, which suggests that meeting the annual target would be a little bit difficult. But as the textile quotas are going to be lifted from January next year, Pakistan's textile millers can raise their exports in the second half of this fiscal year, brightening the possibility of meeting the overall target of $13.7 billion.

But on the other hand, imports have totalled $7.882 billion in the first five months of this fiscal year, which suggests that the country will miss the annual imports target of $16.7 billion by a wide margin.

If imports continue to rise with the same pace, total import bill will be higher than $18.7 billion. So, the trade deficit will expand to $5 billion against the target of $3 billion set for the current fiscal year.

That is where workers' remittances matter most. In the budget for this fiscal year, these remittances were estimated to rise to $3.8 billion and indications are that these would not rise beyond $4 billion.

So, a mere $200 million increase in remittances would be just one-tenth of an additional trade deficit of $2 billion the country seems set to witness during this fiscal year.

The government, therefore, needs to attract as much workers' remittances as possible. It also needs to lure maximum possible amount of foreign investment into the country, besides raising debt from the international market through Islamic and Eurobonds.

Since debt raised from the market is always expensive and it adds to already huge stocks of foreign debt and liabilities, increasing the inflow of workers' remittances and foreign direct investment is a more prudent way of improving the balance of payments.

A press release issued by the State Bank said that in November 2004 alone, Pakistan received $291.81 million in workers' remittances, up from $253.08 million in November 2003.

The inflow of remittances during last month from the US, Saudi Arabia, the UAE, the UK, Kuwait, Oman, Bahrain, Norway, Germany, Canada and Qatar amounted to $81.41 million, $44.88 million, $43.80 million, $31.26 million, $18.55 million, $10.88 million, $6.86 million, $4.66 million, $4.49 million $3.66 million and $3.23 million, respectively. Remittances received from other countries last month amounted to $30.67 million.