Remittances alert

Capital suggestion

Two hundred million Pakistanis collectively export goods worth $24 billion. And two hundred million Pakistanis collectively import goods worth $41 billion. That’s an annual trade deficit of $17 billion. To be certain, the only thing that sustains our external account is workers’ remittances of $18.7 billion per year.

Of the $18.7 billion, Pakistani workers in Saudi Arabia, the UAE and other GCC countries send back a hefty $12 billion or nearly 65 percent of the total. Of the $18.7 billion, Pakistani workers in Saudi Arabia send back a hefty $5.6 billion or nearly 30 percent of the total.

Not too long ago, Saudi Arabia used to export around 8 million barrels of oil per day netting some $300 billion a year. For the record, Saudi Arabia continues to export around 8 million barrels of oil per day but the same quantity of oil is now worth around $80 billion-a 70 percent drop in income.

Last year, Saudi Arabia’s budget deficit shot up to $98 billion. For the first time in recent memory, the Saudi government is seeking international loans in the amount of $6 billion to $8 billion. The Saudi government is holding back contractors’ payments. The Saudi government is raising domestic energy prices and cutting subsidies.

Saudi Oger Ltd, the Hariri-owned construction company, is laying off workers in the thousands. Bin Laden Co has already laid off 15,000 workers. Other Saudi companies are holding back wages of foreign workers; some are reducing salaries. Chevron is laying off.

And while all this is happening, Saudi Arabia is spending $1 billion a month to sustain its war effort in Yemen. Add to that, check-book diplomacy: Egypt has been promised $20 billion worth of oil and loans; Sudan has been given $5 billion in military assistance; $681 million deposited into the personal account of Malaysian PM Najib Razak; and Pakistan to receive $122 million.

In the UAE, where an estimated 1.2 million Pakistani workers are employed, First Gulf Bank, HSBC, Barclays and Standard Chartered are laying off workers. Qatar, where an estimated 90,000 Pakistani workers are employed, is going through its second round of layoffs (especially in the oil and gas sector). In Oman’s oil and gas sector, where 85,000 Pakistani workers are employed, expatriates are being laid off.

The Pakistani diaspora is estimated to be in the range of 8 million to 10 million. Of the total, an estimated 3 million to 4 million Pakistani workers are in the GCC. Of the total Pakistani workers in the GCC, an estimated 1.5 million are in Saudi Arabia. With the Saudi economy in the doldrums some half a million Pakistani workers may soon be headed back. Initially, as Pakistani workers come back there would be a jump in remittances as these workers bring all their assets back to Pakistan. But over the medium term these workers coming back shall mean a drastic drop in remittances.

Our external account will be shaken. And there will be half a million who would have to be absorbed by the labour market. Do we have a plan?

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com  Twitter: @saleemfarrukh