Worker remittances, the sole strength of the dollar-hungry Pakistan’s Balance of Payment (BoP), is also facing a risk of decline in the days ahead as the government has defaulted on six billion rupees rebate which was to be paid to the country’s banks’ overseas partners.
The Pakistanis working overseas, who last year supported the cash-strapped country’s current account by remitting a record Rs 13.186 billion and have remitted $10.354 billion during July-March FY13, are paying extra money in their respective countries to money transfer firms who are applying inflated exchange rates to compensate their losses on account of the rebate Pakistan owes to them. This is again pushing Pakistani expatriates, mostly concentrated in the Middle East doing blue-collar jobs, towards illegal channels of money transfer like hundi and hawala, warned officials from the National Bank of Pakistan (NBP), the country’s largest remittance contributing bank with 0.161 million annual international remittance transactions. The warning came from NBP Global Home Remittance Management Group Head Khalid Bin Shaheen, while briefing media on the bank’s new products to increase the volume of remittances and agriculture financing.
Having built over 30 international tie-ups for NBP during the last three years, Shaheen said the Ministry of Finance was yet to clear last year’s rebate to local banks’ global money transfer partners.
“As a result, they are charging extra money from Pakistani remitters on account of exchange rate,” said Shaheen, warning that if the government did not release the outstanding rebate, Pakistani workers would again be using illegal channels.
Shahbaz Ahmed Khan, head of FI global Home Remittances, said the outstanding dues range from Rs 5 to Rs 6 billion. “This is not a huge sum compared to the $13 billion remittances we are receiving annually,” Khan said. Shaheen said the issue was posing a serious threat to the growth of remittance flowing into the funds-starved Pakistan. Moreover, the NBP official said recently promulgated stricter sponsor-related laws in Saudi Arabia, the largest source of remittances for Pakistan, happened to be another setback to the flow of remittances to Pakistan.
Pakistan defaults on Rs 6b rebate to banks’ overseas partners
