Relying predominantly on remittances to check deficits is not good policy. It’s not even good prescription. Yet here we stand. There’s been no value addition in exports, no materialisation of tax expansion boasts, growth is chronically low, unemployment remains high, inflation is still a problem, but remittances remain healthy enough to offset serious damage to deficits (read serious by government standards). It’s one of those situations; it doesn’t matter much where relief comes from, or why, or for how long, as long as it comes. Sadly though, the very makeup, rather breakdown, of the remittance rush exposes problems of long term trend maintenance. Receipts from the Gulf have increased year-on-year, while our residents further across the Atlantic have been less forthcoming, which, of course, is no reflection on their patriotism. Could the subtlety owe prolonged slowdown in the Middle East, with the Arab Spring, strained credit markets and below par growth ruling out most alternate investment avenues? The numbers from the west are equally revealing; stagnant remittances from some parts and visibly decreased from others. If the stagnant part is from Europe, where the sovereign debt debacle has seriously upset investment opportunities, and the declining trend is from America, where the economy is picking up, this particular thesis will be confirmed. Such currents matter, and while the finance ministry breathes a welcome sigh of relief, it must prepare contingencies for situations when expats will have better areas to park their monies than shuffling them (through proper banking channels of course) back to the homeland. There must be more exports and tax collection, something which the government has not been terribly good at.
