KARACHI, Nov 17: Workers’ remittances from the United Arab Emirates fell 44.25 per cent to $194 million in July-October this year from $348 million in July-October last year. Similarly, remittances from the United States declined 16 per cent to $375.5 million in the first four months of this fiscal year, from $446 million in a year-ago period.

Another country from where Pakistan received lower remittances was Kuwait. Pakistanis living in Kuwait sent back home $51.6 million in four months to October 2003, down 24.9 per cent from $68.7 million they had remitted back home in July-October 2002.

Remittances from the UAE and the US combined fell to $569.5 million in July-October 2003, from $794 million in a year- ago period, showing a decline of $224.5 million or 28.3 per cent. But total workers’ remittances from across the globe, fell only 5.3 per cent to $1.235 billion in July-October 2003, from about $1.304 billion in July-October 2002.

This analysis of remittances is based on the latest statistics posted by the State Bank on its website. The total remittances of $1.235 billion in four months to October 2003 includes $22.59 million received through encashment of, and profits earned on, foreign exchange bearer certificates and foreign currency bearer certificates.

According to a press release issued by the SBP on Monday, workers’ remittances at $1.235 billion in four months are in line “with the target of $3.6 billion announced by the government” for the fiscal year July-June 2003-04. But given the importance of the workers’ remittances in Pakistan’s balance of payments, a huge fall of 28.3 per cent in the remittances received from the US and the UAE warrants immediate attention of top policymakers. (Workers’ remittances are the second biggest source of foreign exchange earning for debt-laden Pakistan after exports and the remittances from the US and the UAE combined account for almost half the total workers’ remittances).

But it seems that the policymakers are focussing more on the overall cash-flow through remittances that has so far been, in line with the target of $3.6 billion the government has set for the current fiscal year.

A KEY QUESTION: So, a key question is will the government not have to revise this target further down if it does not take measures to increase remittances from the US and the UAE? Senior officials of the ministry of finance and of the State Bank say that the prime reason for the fall in the workers’ remittances from the US and the UAE is that the post 9/11 one off transfer of funds have almost stopped. That does justify the fall of the remittances from these two major centres of foreign exchange earning to some extent.

But bankers handling workers’ remittances say that what else has lowered the level of the remittances from there is the fact that the reverse flight of capital has also slowed down.

“Businessmen were bringing in their tax-evaded money, parked overseas, in the name of home remittances using their front-men abroad,” said treasurer of a big foreign bank.

“They are either not doing it— or have considerably reduced this money laundering,” he added. Bankers say what have slowed the inflow of such whitened money is the fact that the US authorities have lately started questioning all money transfers of $5,000 or more directed towards Pakistan. In the UAE also, the condition to disclose the whereabouts of the money transfers worth 10,000 dirhams (Rs160,000) is now being implemented with added care — to block financial supply line of people having links with terrorists.

Senior bankers say that another big reason for the fall in the remittances from the US and the UAE is that hundiwalas or those had recaptured part of their lost market share in July-September. This was the period when the dollar had become dearer in the kerb market — thanks to over-invoicing by exporters and currency smuggling by some foreign exchange companies and money changers.

“The continuing fall in the remittances from these centres is a hangover of this kerb premium,” said treasurer of a local bank. “But as the SBP has successfully eliminated the kerb premium once again official remittances from these centres will see some improvement in November.”

Since October 1, the US dollar has so far shed more than one per cent of its value against the rupee in the inter-bank market. This has also resulted in levelling of the kerb premium once again.

HIGHER INFLOWS: Whereas workers’ remittances from the US and the UAE continued to show a declining trend in four months to October 2003, such remittances from several other countries did witness an increase. That explains why the overall remittances fell only 5.23 per cent in July-October 2003 compared with a year- ago period of last year whereas workers’ remittances from the US and the UAE combined fell 28.3 per cent.