ACCORDING to the latest figures released by State Bank of Pakistan (SBP), remittances dropped nineteen percent in December to $ 2 billion as compared to $ 2.52 billion dollars of the corresponding period last year.
Overall, a decline of eleven percent has been witnessed in remittances during the first six months of current fiscal year and calculations show the loss has been of $ 1.755 billion dollars.
For a country which is already struggling with the balance of payment crisis and knocking at every door to avert default, the significant decline in remittances is worrying which needs to be immediately checked.
We believe that the remittances should increase rather than seeing the reverse gear given the fact that a large number of our people move every year to the foreign lands, especially those in the Gulf in search of jobs.
According to the financial experts, declining trend could be attributed to the difference between US dollar rates in interbank, open and grey markets.
Currently, the dollar rate in the interbank market is Rs228 but it is priced at around Rs237 in the open market and above Rs250 in the grey market.
As a result, the people are using unofficial and illegal means, such as hawala and hundi, to send money from abroad because it is giving them a higher return.
Also, exporters are holding back US dollar proceeds amid this widening currency gap. Experts are also warning that the artificial low dollar rate in the interbank market could cost the country heavily.
The worst part of the low interbank dollar rate is the emergence of a very strong grey market which starts attracting the remittances.
Hence, we will suggest the government to firstly ensure one rate of dollar both in the interbank and the open market and as was decided in the National Security Committee, a firm action needs to be taken against those involved in Hawala and Hundi transactions as they are causing an irreparable loss to our economy.
Overseas Pakistanis should also be encouraged to send their money through legal ways. We believe that our remittances can see a major jump in a matter of few years with the right kind of interventions such as focusing on equipping our youths with the appropriate skills which are in great demand abroad.
More than half of Germany’s companies are struggling to fill vacancies due to a lack of skilled workers.
The same situation is in Japan due to its aging population. We can easily exploit the opportunities in these countries by engaging with them as well as preparing our youths accordingly.
