FOCUS
Last week, the government placed the remittances data for the three quarters of the current fiscal year before the National Assembly, showing a decline in one of the vital sources of foreign exchange, which if not handled properly could morph into a bigger problem.
According to the government figures, the overall foreign remittances shrunk to 14.1 billion dollars for July-March from 14.6 billion dollars in the corresponding period of the previous fiscal year, posting a decline of 2.3 percent.
The biggest decline in remittances came from Saudi Arabia, as money sent by Pakistanis working there fell by 6.2 percent.
According to federal minister Zahid Hamid, who put the figure before the parliament, an 11 percent decline was also registered in the demand for Pakistani workforce abroad and a large number of those employed especially in the Gulf States have returned home after losing their jobs.
He attributed the decline in remittances to falling oil prices in the international market, decrease in demand for foreign workforce in the oil-rich Gulf countries, and a decline in the wages of the labourers in these countries.
Foreign remittances along with exports and foreign investments are major sources of earnings for a country, particularly for a developing nation like Pakistan, which are used to build its foreign currency reserves.
But in Pakistan, successive governments have given scant attention to reinforce and strengthen these sources of earnings to build foreign reserves, and instead have relied heavily on borrowings, particularly from the international lenders to build these reserves to avoid repeated balance of payment crises.
Even if they borrowed money from outside to avert an imminent economic collapse, they subsequently failed to raise money from domestic sources to avoid such a situation in future.
It seems that the present government is also following in the footsteps of its predecessors.
Soon after coming into power, the government signed a bailout package of 6.7 billion dollars with the International Monitory Fund (IMF) and successfully averted a major economic crisis.
After this unavoidable step, the government was expected to rely less on borrowings, and was to take steps to raise money from its sources, but unfortunately that did not happen.
It is not just remittances which are showing a downward trend, exports are falling too. Despite announcement of a big financial package by the government, and foreign investment, the exports are not showing any encouraging signs. The government is heavily and solely relying on China-Pakistan Economic Corridor (CPEC)-related projects that it hopes would help avert an economic crisis.
The government cannot just shrug off its responsibilities. It would have to explore multiple ways to address the country’s economic woes.
Foreign remittances have fallen not just because of declining oil prices. The financial crisis has forced the gulf countries to resort to extensive retrenchment of their workforce, and foreign workers are bearing the brunt of this action.
Nearly 39,000 Pakistanis have been deported from Saudi Arabia between October and February, according to the Saudi media.
Hundreds of thousands of workers from other countries like Philippines and India have also been sent packing, but the Pakistanis have been deported not just because of violation of local labour rules.
According to the Saudi media, a large number of Pakistani workers were also deported because of their alleged involvement in crime and terror-related incidents.
In February, the Saudi Gazette quoted chairman of the security committee of the Shoura Council Abdullah al-Sadoun calling for thorough scrutiny of Pakistanis before they were recruited for work in the gulf state.
He also asked for more close coordination with the concerned authorities in Pakistan in this regard.
The Pakistani workers, on the other hand, complained of exploitation at the hand of their Saudi employers. Many of them complained that they had not been paid their salaries for months, causing unease among them as well as their families.
Just last week, 130 Pakistanis were deported from Saudi Arabia for overstaying or working without valid permits. Some of them alleged that they had not been paid their salaries for over a year.
Official Saudi figures show more than 240,000 Pakistani workers were deported between 2012 and 2015. In total, there are close to one million Pakistanis working in Saudi Arabia mainly in its construction industry.
However, the overall construction slump in the Kingdom has resulted in a drastic reduction in the jobs mainly for the foreign workers.
Saudi Arabia is the biggest source of foreign remittances for Pakistan. According to a report of the State Bank of Pakistan issued last year, remittances from Saudi Arabia made up the lion’s share of the over 18 billion dollars sent by expat Pakistanis from July to December.
Since the country has traditionally enjoyed special relations with Saudi Arabia, the government needs to use these ties to mitigate the plight of Pakistanis working there. It is unfortunate that expats in Saudi Arabia often complain that they do not get desired help from Pakistani diplomatic missions there.
According to the officials, the drop in foreign remittances was not just because of difficult economic situation in the host countries. They attribute the recent decline in the flow of remittances from the United Kingdom to the depreciation in the value of pound sterling.
The government needs to thoroughly look into the reasons behind the fall in this important source of foreign currency and explore remedial measures.
In view of the recent IMF statement warning upcoming challenges for the Pakistani economy, there is no room for complacency for the government. It needs to wake up and address these concerns; otherwise the economy of the country would slide back to the dire straits it was in few years ago.
So far, there are no indications that the government is serious to tackle these issues on urgent basis.
With rumours making rounds that there is a possibility of an early election in case of an adverse decision in the Panamagate scandal, the government seems more interested to take popular and populist decisions to secure its votes instead of taking bold decisions to fix the economic problems. For now, it seems, the economy has been put on a back burner.
The writer is a senior journalist based in Islamabad
