Boosting Remittances

The latest figures released by the State Bank show that Pakistan received remittances amounting to $8.02 billion in July-November this year. Inflows in the first five months of the current fiscal year increased only 1.3 per cent as compared to a year ago. The decline in remittances from Saudi Arabia is notable, which is a matter of concern as the kingdom is the biggest source of inflows. Workers based in Saudi Arabia sent home $2.1bn in July-November, down 7.1pc in the same period of 2016-17. The biggest increase was witnessed in remittances from the United Kingdom. Inflows from the UK increased 23pc to $1.13bn. However, remittances from the United Arab Emirates showed a decrease of 1.8pc to $1.76bn. Inflows from the United States increased 5.6pc to $1.05bn. This was in contrast to the decline of 9.7pc recorded in the corresponding period of the last fiscal year.
Remittances have assumed greater importance in the wake of falling foreign exchange reserves. Pakistan recently borrowed $2.5bn by auctioning sovereign bonds in the international market to keep reserves at a reasonable level. In the given circumstances, the State Bank of Pakistan has been trying to devise ways to increase home remittances. It may be added here that this initiative has been launched in collaboration with Pakistan Remittance Initiative (PRI) to promote the use of bank accounts by home remittance recipients. Individuals can open these accounts with a simple, one-page account opening form, which is both paper-based and electronic, requiring only basic customer information. The account is designed only for beneficiaries of home remittances and will be fed with the proceeds of home remittances only.
Universally, home remittances are considered as one of the main factors in the stability of a country’s external account balance. At present, the inflows of remittances are now almost equal to the value of exports. While the government is trying to increase its labour force participation in infrastructure activities in the rest of the world to raise remittances, particularly in the Gulf region, the SBP is making efforts to promote the use of formal channels for the transfer of remittances by encouraging banks to expand their networks with leading money transfer operators. In this respect, the launching of PRI some time back has greatly helped to increase the flow of remittances to Pakistan.
Of late, the PRI seems to have lost its effectiveness. In view f this, the latest initiative of ‘Asaan Remittance Account’ has been started. Obviously, if the beneficiaries are convinced about the convenience of such an account, more transactions would be channelized through the banking system and the amount of home remittances would increase to support the external sector position of the country. To this end, it is important that the Asaan account be given maximum publicity at home and abroad.

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Mian Bilal