Rethinking remittances

Following the release of monthly remittances figures by the central bank, foreign receipts from non-resident Pakistanis for the first five months of FY16 stood at $8.08 billion, up by around nine percent year-on-year. In the latest month i.e. November 2015, the inflow of workers' remittances amounted to $1591.75 million, which is 3.36 percent higher month-on-month, and 18.45 percent higher year-on-year.

Not underestimating the restorative qualities of these foreign receipts for the balance of payments amid falling exports, there is another side of home remittances that needs to be understood - the side which includes the whitening of black money. However, there exists little information on what percentage of the total is contributed by illegal remittances.

Also, it must be understood that remittance inflows in the country has been sharply tilted. And that is because a large chunk of the total foreign receipts come from Saudi Arabia, UAE and other Middle Eastern countries that bank on oil. The risk lies in the chances of a continued fall in oil prices that would have adverse impact on the foreign inflows from the GCC world. Compared to that, countries like Philippines and India, the foreign diasporas is more diverse, and hence less crucial to vulnerability in one economy.

So while there is a need for proper monitoring of foreign receipts from overseas Pakistanis, there is also a need for somehow increasing the knowledge base, quality and mix of people leaving the country to make them eligible for better jobs, business and income levels.

However, this is going to be tricky; the policy makers need to adopt ways that do not discourage the rising and contributory trend of home remittances.