KARACHI: Overseas Pakistani workers are rendering great national service as their remittances recorded an impressive growth of 19.5 percent.
Official sources, talking to the daily The Post said that Pakistani workers remittances continue to register sound growth each year. The remittances showed a growth last year and this year they not only maintained the growth but it has increased about 20 percent during July to April. Remittances routed through exchange companies contributed 60.2 percent in the over-all remittances growth.
As a result, foreign exchange companies share in overall remittances increased to 23.8 per cent during July-April fiscal 2008 from 16.7 per cent for the same period last year. Part of the strong growth in the remittances, the sources said that was probably a consequence of rising costs of living at home.
The sources said that a greater share of remittances was that of the oil-rich gulf region Kuwait, Bahrain, Qatar, Oman, Saudi Arabia and the United Arab Emirates (UAE) and from the United States of America. Increase in remittances to Pakistan in recent years is in line with the international trends. The world top fifteen remittances recipient countries have experienced increase in remittances in the last two years, Pakistan registered the third highest growth of 19.6 percent in remittances during 2006 and the highest growth of 19.1 per cent in 2007, among the top fifteen countries.
As a result, Pakistan has become world’s 12th largest remittance recipient country during 2007 from 17th in 2005, they added. Discussing resident foreign currency accounts, the sources said that historically, whenever expectation of depreciation in Pak Rupee takes hold, the resident foreign currency account records considerable inflows.
In line with this, the expectations of exchange rate depreciation in the recent months led to $351 million inflow in resident foreign currency account during July to April 2008 compared with nominal inflows of $59 million in the corresponding period. Pakistan has had very low level of portfolio investment four to five years back. However, in the last three years from fiscal 2005 to 2007, foreign inflows in portfolio investment picked up sharply on the back of a combination of factors. On the one hand, liquidity comfort in international market alongwith political and economic stability at home enabled Pakistan to raise funds from international capital market in the form of euro (sukuk) bonds and GDRs, at favourable rate. On the other hand, remarkable performance of stock market also attracted sizeable amount of foreign investment in the last two years.
The congenial international and domestic environment, however, changed for worst during July to April 2008. International financial market was hit by subprime crisis which led to capital flight from emerging economies stock markets and also increased the risk, premium of raising funds from international market.
In the backdrop, a larger part of the extraordinary fall, during July to April fiscal 2008, is not surprising which is attributed to delay in the floatation of Global Depository Receipts (GDR), delay in issuance of ‘Euro Bonds’ and capital outflow from the Stock market.
However, the financial pundits expressed apprehensions for future growth in remittances as the country was passing through turmoil since March 2007 and not yet out of the crisis. The PPP government owes a great responsibility to the nation and the country, being at the helm of affairs to adopt stringent political and economic measures to improve the economic conditions at home. The political parties in the opposition owe more than that as they were responsible for the current crisis. They have to shun their petty political differences, as President Musharraf has said while addressing the business community in Karachi that the result of the crisis will be that Pakistan will be suffering the most.
With the improvement in socio-economic conditions at home, the experts feel that the remittances will grow tremendously. First we have to set our house in order, they added. Moreover, the financial pundits advised that the government has to take immediate remedial measures to keep the bourses functioning in a sound manner.
They needed confidence for restoring stability of the Stock markets and have to check the capital flight. The experts said that 100 days of the PPP government have passed and there was little to celebrate while the worries are galore. There was still time to put halt to the economy’s downfall, they added.
Source: The Post, 7/7/2008