LONDON: Expatriates in Saudi Arabia send more remittances to Pakistan than from anywhere else in the world, according to a senior official of the National Bank of Pakistan (NBP).
Khalid Bin Shaheen, senior executive vice president and group chief of the Global Home Remittance Management Group at NBP said: “Saudi Arabia is no longer just one of the leading sources of remittances for Pakistan. Instead it is the forerunner followed closely by UAE”.
This was corroborated by figures released by the State Bank of Pakistan recently, which showed that Pakistanis residing in Saudi Arabia sent home $657.78 million in the first two months of July-August FY12. In comparison, the inflow of remittances from the US, UK and Europe was only $446.61 million, $334.06 million, and $63.57 million.
He said that it was a widely held misguided view that affluent Pakistani immigrants in Western countries including USA, UK and Europe sent more remittances back home than their Middle Eastern counterparts.
The remittances sent home by overseas Pakistani workers have more than quadrupled in the last eight years to more than $13.186 billion, the highest-ever amount received in a year by the country in the last fiscal year, which ended in June 2012.
Explaining the reason for this anomaly, Shaheen said: “Even though the Pakistani diaspora living in the West is more prosperous than the majority of working class doing menial jobs in Saudi Arabia, UAE and the Gulf region, the former invest more in the countries they are residing in as they acquire citizenship there whereas the latter are unable to acquire foreign citizenship and therefore, they send back more money to their relatives and families in Pakistan.”
He added: “The rising remittances, which are the second major source of foreign exchange earnings after exports, has helped sustain Pakistan’s economy despite the extreme political instability, high oil prices and costly imports.
He praised the Pakistani community residing abroad who have always played an important role in the country’s foreign exchange reserves and credited the sharp increase to a crackdown on the illegal hundi and hawala money transfer system in general and to easier methods of transferring money though banks.
He said: “NBP is one of the largest players in the remittance market of Pakistan and partnerships with Western Union and other international exchanges will only consolidate the Pakistan Remittances Initiative (PRI), which has increased worker remittances coming through the banking channel considerably and this ultimately has spillover effects for the entire economy.”
According to the World Bank data, Pakistan has become the fifth largest remittances recipient developing country in 2011 after India ($58 billion), China ($57 billion), Mexico ($24 billion), and the Philippines ($23 billion).
The World Bank has estimated that the remittance flows are expected to continue growing, with global remittances expected to exceed $593 billion by 2014, of which $441 billion will flow to developing countries.