KARACHI, Oct 16: Workers remittances — or money sent back home by expatriate Pakistanis — fell to $890.3 million in the first quarter of this fiscal year down $152.7 million or 14.6 per cent from $1.043 billion in a year-ago period.
According to the latest State Bank statistics available on its website, Pakistan received home remittances worth around $906.5 million in July-September 2003 down from about $1.053 billion in July-September 2002.
Overall home remittances also included about $16.2 million received through encashment of profit earned on foreign exchange bearer certificates and foreign currency bearer certificates in July-September 2003. Similar inflow stood around $10 million in July-September 2002.
If the inflows relating to encashment of and profit earned on FEBCs and FCBCs are netted out from total home remittances the exact amount of workers remittances comes to $890.3 million in the first quarter of this fiscal year down from $1.043 billion in a year-ago period.
The country-wise break up shows that a massive 31.7 per cent fall in the workers remittances from the US and the UAE in July- September this year resulted in an overall decline in workers remittances despite some improvement in remittances from other centres.
The remittances from the US and the UAE combined went down to $404.5 million in the first quarter of this fiscal year down 31.7 per cent from $592.8 million in the corresponding period of the last fiscal year. Since the remittances from these two centres account for about half the total remittances, this 31.7 per cent decline in remittances from there in three months resulted in a five per cent fall in overall remittances from around the globe despite higher inflows from some other centres. The figures show that workers remittances from Bahrain, Canada, Germany, Norway Qatar, Saudi Arabia, Oman and the UK recorded some increase in July-September 2003 over the same period of 2002. Remittances from Japan showed a nominal fall and remittances from Kuwait fell substantially — from $46.6 million in the first quarter of 2002 to $37.8 million in the first quarter of this year.
REASONS: Senior bankers say the remittances from the US have been on the fall because the banks and exchange companies making money transfers from there to Pakistan and other Asian countries are being required to disclose details to the US authorities.
Officially heads of banks in Pakistan and officials of State Bank say nothing on this subject but bankers whose job it is to handle remittances from the US say money transfers of $5000 and above from the US to Pakistan are being reported to the US authorities. “This reporting requirement has scared many people who are either sending money back home through illegal means or sending them in lots of less than $5000,” said head of treasury of a local bank.
Bankers say the remittances from the UAE have also been on the fall primarily because money transfers of more than 10,000 dirhams or Rs160,000 are required to be reported to the UAE authorities. They say another reason for the fall in remittances from the US and the UK is that the network of hundiwalas or those involved in illegal transfer of money is stronger there than in any other part of the world. They say the spike the dollar showed in the open market during July-September activated hundiwalas and they did transfer a larger sum of foreign exchange back home than in the previous months through hundi or hawala. This naturally lowered the volume of the remittances that were coming through the banking system.
Senior bankers say the State Bank action against the exchange companies and money changers involved in currency smuggling and under-reporting of export of non-dollar currencies have resulted in stability of exchange rates in the open market. “So there are chances the remittances do not show major fall in October onwards because of increased activity of hundiwalas due to increased spread between inter-bank open market exchange rates,” said chief executive of an exchange company. But he feared that a declining trend in inflows from the US and the UAE may continue for other reasons cited earlier.
In September alone the workers remittances from the US fell 21.5 per cent to $97 million from $124 million in September 2002. Similarly, the remittances from the UAE fell 36 per cent to $50 million from $78 million. Overall workers remittances declined to $312.95 million in September 2003 from $348.34 million in September 2002. These figures have been obtained after netting out the inflows through encashment of and profit earned on FEBCs and FCBCs. Even otherwise overall home remittances declined to $318.38 million in the first quarter of this fiscal year from $353.04 million in a year-ago period.
Home remittances are the second largest source of foreign exchange earning for Pakistan after exports and any decline in it is bound to have an adverse impact on the balance of payment.
Pakistan attracted a record $4.2 billion home remittances in fiscal year 2002-03 up from $2.4 billion in 2001-02. The indicative target set for home remittances for this fiscal year is $3.8 billion or so. About 3.5 million Pakistanis work abroad.