Foreign remittances show sluggish growth

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KARACHI: Growth in workers’ remittances has been slow during May 2013 despite claims by the State Bank of Pakistan (SBP) of increasing the remittances’ inflows under its Pakistan Remittance Initiative program.


Pakistan Remittance Initiative (PRI) was established in 2009 in collaboration with other stakeholders to facilitate both overseas Pakistanis and their families back home. Since its inception, PRI has taken a number of steps to enhance the flow of remittances through formal channels. According to SBP data, workers’ remittances surged by 5.74 percent to $12.762 billion in eleven months of the current fiscal year against $12.069 billion during the same period of the last fiscal year.


The SBP reported on Monday that remittances form overseas Pakistani workers stood at $1.192 billion in May 2013, showing a year-on-year growth of 0.04 percent over the same month last year. During May 2012, workers’ remittances amounted similar to $1.192 billion after witnessing an increased year-on-year growth of 14 percent or $1.049 billion in May 2011.


Most of the analysts believe that the inflow of workers’ remittances to Pakistan is likely to exceed $14 billion for the fiscal year ending June 30, 2103.


The central bank forecast that remittances will be in the range of $14 to $15 billion in fiscal 2012-13. During the last fiscal year, remittances amounted to over $13 billion.


However, the current remittances may witness a dip if forex spread (a rupee value difference between interbank and open markets) is widened and thereby increasing use of unofficial channels for money transfer, experts said.


Showing an eight percent year-on-year average growth, it seems the amount will rise to $14.256 billion at the end of current fiscal year, which will also be in line with the State Bank of Pakistan’s estimate, they said.


Economists have warned though that inward remittances are likely to turn negative next month. “I have been warning the State Bank and the government for several times that the rise in the remittances inflows is not the result of the State Bank-led Pakistan Remittance Initiative (PRI). It is re-routing of illegal or black money under the instrument of PRI. The money came to the country and heavily invested in the stock market,” said Dr Ashfaq H Khan, renowned economist and Dean NUST Business School.


“The State Bank took the credit of the surge in workers’ remittances, now it is the responsibility of the central bank that it must tell government and the people about the causes of slowdown in the growth of remittances,” he added.


“The SBP misguided people and government that rising remittances from the expatriates residing in different countries providing cushion to the fragile balance of payments position. At this crucial movement, when the current account posting deficit, the SBP should portray the correct picture of the remittances figures to the people,” he said.


But the State Bank denies this - it said that PRI had discouraged the use of illegal modes of money trasnsfers.


The bank added that the system had contributed a lot towards channeling remittances inflows through official sources.


Out Of the total remittances from Pakistani workers, the Gulf region tops the list, followed by the United States and the UK.

Courtesy:   The News

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