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May 17, 2021

Remittance report

 
May 17, 2021

The findings on foreign remittances to Pakistan from its workers employed overseas, published in the World Bank’s Migration and Development Brief, provides us with some excellent news. Instead of the decline in remittances widely projected in early 2020 because of apprehensions regarding the Covid-19 pandemic and the eviction of Pakistani workers from countries including several in the Middle East, remittance flow into the country increased by about 17 percent in 2020 with a current account surplus of $945 million recorded by the State Bank in the first three quarters of the current fiscal year. The increase in remittances, also seen in other South Asian countries, has meant the central bank now holds a record foreign exchange reserve. Policies which included a tough crackdown on informal money transfers under FATF regulations, the opening of Roshan Digital Accounts which allowed Pakistanis to send money to accounts opened in banks at home and policies allowing investments in land all pushed forward this encouraging increase. It appears the pandemic in fact may have prevented use of funds for travel and other similar purposes. As would be expected, most of the funding came in from Saudi Arabia and EU countries. This is good news for Pakistan which has been struggling to maintain a steady reserve of foreign exchange. There had been fears that Covid-19 would lead to a worsening of the situation.

The remittances also demonstrate, as was the case since they began in the 1970s, just how important money coming in from overseas Pakistanis is to the country’s economy. Pakistan needs to do more to protect this flow by persuading nations to slow down or halt policies which place tough travel restrictions on Pakistanis or refuse them visas. If we can develop better ties and stronger links, the scope for Pakistanis working abroad could increase still further. Pakistani labourers make up a large part of the labour force in many richer countries, but the country also sends IT specialists, nurses, teachers, doctors and professionals in other fields overseas.

The brain drain though is highly damaging to Pakistan. The solution may be to produce more professionals, especially in sectors which need more expertise such as nursing and teaching so that our best professionals are not lured into more lucrative pastures. The fact that Pakistanis continue to send money home, at a time when remittances to other nations including China fell by some 30 percent, is also encouraging and shows the degree of loyalty to family and country which has served us well in the past. We must find ways to keep the remittances flowing in through documented banking channels but also keeping in view that these foreign remittances show how much talent Pakistan may have lost to other nations. Pakistan’s high population growth rate and high unemployment also make it inevitable that people will seek roots out of the country. Along with encouraging remittances, the country needs to develop entrepreneurial opportunities at home so that investment inside the country can also flourish and offer both resources and jobs. The success in defeating a drastic decline in foreign remittances at the height of the Covid pandemic is encouraging.