A pleasant surprise came in the way of Pakistan’s economy as the half-yearly inflows of allowances that exceeded merchandise exports of $12.1bn by a wide margin, it was very unexpected as due to a decline in the global economy in the midst of Covid-19 pandemic. A collapse in Pakistan’s manpower exports — from 625,203 in calendar year 2019 to 224,705 in calendar year 2020 — made the unparalleled increase in remittances all the more considerable.
Non-resident Pakistanis, who are returning back to Pakistan from host countries after loosing their jobs are bringing back their savings; they are sending more money back home to provide greater funding to their families as Pakistan’s domestic economic growth turned negative; an effective crackdown on illegal transfers of foreign exchange has pushed up official inflows; and the central bank’s scheme to attract remittances through Roshan Digital Accounts for overseas Pakistanis has started showing the impact.
Now is the time to distinguish the one-off factors of remittances evolution and emphasis on systemic changes made in the remittances’ regime that have so far kept them growing.Moreover Each of these factors has undoubtedly contributed to the swift rise of remittances. But will remittances continue to grow this fast? Or will the growth rate will decelerate at some point?
The government has decided to endorse such savings and investment by facilitating and incentivising overseas Pakistanis to use their remittances’ accounts for investing in Pakistan’s debt, equity and mortgage markets. Abiding success of this policy, however is depending upon the close coordination of financial and economic authorities and overall political stability.