Migrant cash flows are a lifeline for millions of households in the country and are one of the biggest sources of foreign exchange earnings. Any change in these inflows should be carefully monitored by the government so that the country is not deprived of valuable foreign exchange and at the same time is prepared with a strategy for any such eventuality. This week, the State Bank of Pakistan (SBP) disclosed that the country attracted $19.91 billion in remittances during fiscal year 2015-16. What is significant is that worker remittances fell below the State Bank prediction by about three per cent.
The trend is expected to continue during the current fiscal year as the slowdown in Gulf economies hits Pakistani workers living there. For example, workers sent less money home in June compared with the same month a year ago. Subdued oil prices in GCC countries and the tightening of labor market policies in Saudi Arabia are to blame. A number of Pakistani workers have lost their jobs as a result of the economic slowdown.
Analysts believe that inward home remittances will continue to be under pressure in the foreseeable future due to the low growth in Saudi Arabia and other GCC countries. In FY17 for example, remittances from Saudi Arabia alone fell 8.35 per cent to $5.469 billion.
It is time that the government devised a strategy to address the situation. As things stand, the prospect of employment abroad for Pakistanis is becoming dim with each passing year. One reason for this is that most Pakistani workers who go abroad fall under the unskilled category. We need to start training young men and women in different skills so that they can now get jobs in the skilled categories as well. And those that already possess skills only need certification by a recognized assessment body.
The other challenge for the government would be to wean itself away from over dependence on remittances as a source of foreign exchange earnings. As inflows decrease, other areas have to be opened up to earn foreign exchange. The most obvious option would be to boost exports in non-traditional areas. Very little has been done towards that effort. This has to change in the coming days if the economy is to be made independent of foreign aid and constant borrowing.