58pc inflows from Middle East: Remittances jump to $11bn in 2010-11
KARACHI, July 9: The fiscal year 2011 received record remittances of over $11 billion, which was half of the entire export proceeds of 11 months assuring current account surplus after consecutive seven years’ deficit.
The State Bank reported on Saturday the country received $11.2 billion remittances in FY-11 and the June was the 4th consecutive month when the inflows were over $1 billion.
The remittance, which must be around 45 per cent of the exports for full year, has taken a very strong position and a definite shape in the economy of Pakistan.
The State Bank reported that the remittances witnessed a 25 per cent growth this year compared to last year inviting attention of the economic managers to exploit the opportunity for enhancing remittances to the maximum.
The country has been struggling to restore its suspended loans from the IMF to improve its reserves but the increasing remittances practically helped the country out with surplus account and record foreign exchange reserves despite high oil prices and costly imports.
The current account was surplus with $205 million in first 11 months compared to a deficit of $3.4 billion in the previous year during the same period.
Overseas Pakistanis sent home a record amount of $1.104 billion in June 2011, which is the highest-ever amount remitted in a single month. It was 31.27 per cent higher than June of last year.
The monthly average remittances for July-June, 2011 period comes out to $933.41 million as compared with $742.16 million during the previous fiscal year, registering an increase of 25.77 per cent.
The target of workers’ remittances in the Annual Plan for FY11 was around $9 billion.
The State Bank, ministries of finance and overseas Pakistanis had undertaken a joint initiative called ‘Pakistan Remittance Initiative (PRI)’ with a view to facilitating the flow of remittances in the country through formal channels.
However, still no important step has been taken to solidify the very important segment of economy.
Analysts have been talking about a decline in the exports during this fiscal 2012 since the fall of cotton and cotton-based product prices in the global market.
“Under this situation, the government must make a strategy to improve remittances inflows and provide special incentives to encourage overseas Pakistanis,’ said Mohammad Imran, analyst at Arif Habib Investment.
Currency expert and dealer Anwar Jamal said the $11 billion remittance was the real force behind the strength of the local currency, which remained strong despite weak economy dominated by double-digit inflation.
High inflation weakens the purchasing power of local currency, which ultimately causes loss against strong currencies like dollar, he said.
Over 58 per cent remittances were received from the Middle East counties. Out of $11.2 billion, about 6.57 billion were remitted from this region.
Highest inflow and increase in remittances during the fiscal year 2011 was noted from Saudi Arabia to $2.67 billion, an increase of $753 million.
Similarly remittances from the UAE, up by $289 million to $2.597 billion, USA $2.068 billion higher by $297 million, GCC states $1.306 billion, higher by $69 million, UK $1.199 billion with an increase of $323 million and European Union $345 million higher by $102 million.