Remittances standing tall

Largely impervious to global uncertainties, hard-earned money sent home by overseas Pakistani summed to a sizeable Rs.12 billion during the first eleven months of the current fiscal year, glided 20 percent higher compared to the same period of last year. Workers remittance from Saudi Arabia is leading the field, accounting for a quarter of the total inflows. However, workers reparation from the four major destinations: Saudi Arabia, UAE, USA and UK alone accounted for around 80 percent of the total remittances received since the start of the current fiscal year. Thanks to overseas Pakistani, the country managed to rank as the sixth largest recipient of remittances in 2011. Behind the radical growth are stable economic prospects in oil-rich Middle Eastern countries, along with initiatives taken by the government to facilitate transfer of funds through formal channels. In part, intellectuals held the incentive to turn black money into white money responsible for the portion of growth in inflows. Decline in interest rates also failed to upend inflows, negating the market perception that higher interest rates were inducing stream of remittances from abroad. Besides, there is an unequivocal disconnection between rupee-dollar parity and the remittance inflows in the past, thus, suggesting inflows to remain resilient down the road in the face of recent slide in rupee against dollar. The inflow pattern chimes with that of other developing countries. According to the World Banks estimate, remittance flows to developing countries are estimated to have reached $372 billion in 2011, a jump of 12.1 percent over 2010. However, remittance inflows to South Asian region alone registered a growth of 18 percent in 2011- the highest growth rate among other regions. The multilateral agency forecasted inflows in developing countries to grow at 7-8 percent annually to reach $467 billion by 2014. If history is any guide, given that remittance inflows realised an average annual growth rate of 30 percent during the past ten years, inflows send home by overseas Pakistani should continue to make headway. It has been estimated that the country can fetch around $20 billion in annual inflows if all funds are routed through formal channels. All of this is a sign of progress, but there are a slew of downside risks to this paved outlook. A combination of economic upheaval across developed countries, tougher immigration rules and vague oil outlook might throw a spanner in the works.