Changing times and trends
Worker’s remittances which cover 45pc of Pakistan’s import bill have long formed the bedrock of the economy as a reliable source of foreign exchange earnings. The year after year increase in the amount of remittances witnessed particularly after the Pakistan Remittance Initiative (PRI) narrowed down the role of informal channels provided a sense of security to the country’s economic managers. With exports consistently on the declining path, last year Pakistan’s $19.3 billion in remittance made up 6.9pc of GDP, essentially closing the rising trade deficit amid the nation’s falling exports. Remittances also remain an important and fairly stable source of income for millions of families in Pakistan.
There are signs of the rate of increase in remittances decelerating. Last year there were reports of inflows from the United States, which has traditionally been one of the principal sources of remittances, having slowed down remarkably. In addition to the United States, remittances from the United Kingdom also slowed down in recent years, State Bank of Pakistan data showed. From 12.9pc growth rate in 2013-14, remittances from the United Kingdom increased only 4.9pc in 2014-15. They amounted to $1 billion in July-November, which is up only 4.4pc from the same period of the preceding fiscal year. And now comes the bad news from the Gulf. With the oil prices going down, austerity has become the buzz word in the Gulf too. There are taxes on petrol and drinking water making service in the countries less attractive. Construction companies in Saudi Arabia are having fewer government contracts and some have fired thousands of workers. More are on the way out as plans to replace foreigners with local employees move ahead.
The government needs to realise the danger it faces. It has to work overtime to increase exports and attract FDIs. Meanwhile it has to create jobs for the returning expatriates who have served the country to the best of their ability for over three decades.