ISLAMABAD: Pakistan’s economic managers are all set to launch a major scheme for luring commercial banks to establish joint ventures with hundreds of branches of international banks operating at selected destinations in Gulf, Europe, USA, Malaysia and others to boost up remittances from overseas workers through official banking channels.
The government will bear the cost to incentivise the commercial banks to ensure speedy delivery of money in each nook and corner of Pakistan. These commercial banks will have to establish joint ventures with branches of hundreds of international banks located at desired destinations in a bid to reduce the patronage of Hundi and Hawala businesses.
The country’s remittances from overseas Pakistanis stood at $19.303 billion in the fiscal year 2016-17 against $19.917 billion in the previous fiscal, indicating that the growth in remittances almost got choked.
In the wake of rising current account deficit and choking of remittances growth in recent years, the Ministry of Finance and State Bank of Pakistan are working together for finalising a scheme to boost up remittances from selected destinations where Pakistani workers in the range of around 8 million are working and remitting money from abroad. “There will be cost involved in this proposed scheme and a few billion rupees will be utilised to increase the workers’ remittances in the range of $2 to $3 billion on annual basis,” top official sources confirmed to The News here on Tuesday.
The approval of Federal Minister for Finance Ishaq Dar is awaited for moving ahead with this proposal, the official said and added that Gulf region, European Union, USA, Canada and Malaysia would be given top priority. The major attractive destinations are Saudi Arabia, the UAE, Qatar and other parts of Gulf Cooperation Council (GCC).
Pakistan’s remittances had reached $ 14.1 billion during July-March FY2017 as compared to $14.387 billion and registered a negative growth of 2.3 percent as compared to the last year. Year on year basis remittances inflow dropped marginally by only 1 percent, however on month on month basis March-February about 20 percent of increase is recorded.
The trend was projected to continue in coming months. The major share of remittances originate from Saudi Arabia 29.01 percent (US$ 4,078.07 million), UAE 22.23 percent (US$ 3,124.40 million), USA 12.3 percent (US$1,729.60 million), other GCC countries 12.14 percent (US$1,706.04 million), UK 11.77 per cent (US$1,655.06 million), EU 2.37 percent (US$332.54 million) and other countries 10.19 percent.
Remittances during July-March FY2017 have declined by 6.23 percent from Saudi Arabia, 2.5 percent from the UAE, 8.5 percent from United Kingdom, 3.8 percent from other GCC countries, and 6.9 percent from USA, while from other countries and EU countries it increased by 29.17% and 16.29%, respectively compared to the same period last year. However, during July-March FY2017, remittances declined due to inflows drop from all the three major corridors — the GCC, US and UK. Decline in remittances from Saudi Arabia along the GCC was on account of slow economic activities in these countries along with fiscal consolidation due to decline in oil prices. Due to seasonal factors like Ramadan and Eid, the flow of remittances increased as workers remit more money due to which remittances declined in the first quarter. This will be offset by growth in remittances during coming months.
For the US, it was the tightening regulatory environment for anti-money laundering and counter-financing of terrorism (AML/CFT) that has contributed to lower inflows. The main reason for the decline from the UK was the Pound’s depreciation against the US dollar following the Brexit vote on June 23, 2016; this had led to a significant drop in the dollar value of remittances sent from the UK.
However, Pakistan’s official circles believed that the development activities under Saudi Arabia’s vision 2030 which provides a roadmap for Kingdom’s development and economy for next 15 years, the FIFA world Cup 2022 in Qatar and Expo 2020 in Dubai would create more labor demands for Pakistani workers thus remittances could boost up in months and years ahead. The News