Government gets $500 million offer against securitisation of remittances

The government has received Saudi American Bank and Al Raji Group''s offer to provide Pakistan 500 million dollar against sercurtisation of remittances. Al Raji Group manages a major portion of Pakistan''s remittances and Saudi American Bank owns Cres Bank in Pakistan.
These two parties have offered Pakistan to arrange $500 million against securitisation of remittances. Securitisation of remittances for raising money from the banks or other fund managers to support fast depleting foreign exchange reserves is one of the options being considered by the government. The government is now waiting for some competing offers.
Pakistan''s remittances had touched all time high level of $6.9 billion in 2007-08. This year the government is expecting even more inflows as remittances and on the same calculations it decided to use the option of securitisation of these inflows.
Pakistan foreign exchange reserves had gone up to around $17 billion at one point. Then due to slow down of the inflows it started to decline. The fast depletion of the foreign change reserves have created an alarming situation for the government. The financial crisis is forcing the government authorities to weigh up every possible option for raising money to get out of the situation but there seems no visible source for immediate make-up except non-traditional sources such as securitisation of remittances and privatisation.
The government is already on its feet to implement a multi prong strategy for improvement on economic front. It has approached Saudi Arabia for seeking oil facility valuing around $6 billion against deferred payment, besides requesting many other countries to provide Pakistan support to overcome economic crisis. It is also seriously pushing forward privatisation programme. For the first time those assets which in the past were not on the priority list for divestment have been included in the sell-off list. The Oil and Gas Development Company''s (OGDC) proven reserves of oil and gas is one of such assets. The government needs around 8 to 10 billion dollars to get out of the financial mess.