Pakistan Economy

Pakistan Remittances vs Foreign Aid

The remittances of Pakistanis living abroad has played important role in Pakistan's economy and foreign exchange reserves. The Pakistanis settled in Western Europe and North America are important sources of remittances to Pakistan. Since 1973 the Pakistani workers in the oil rich Arab states have been sources of billions dollars of remittances.

The 7 million strong Pakistani diaspora, contributed US$11.2 billion to the economy in FY2011. The major source countries of remittances to Pakistan include UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, UK and EU countries like Norway, Switzerland, etc.

The State Bank of Pakistan (SBP) has announced that remittances sent home by overseas Pakistani workers have crossed the $10 billion mark for the first time in the country’s history as the figure reached $10.1 billion in 11 months (July–May) of the current financial year. The 11-month figure was $2.07 billion or 25 per cent more than $8.09 billion worth of remittances received in the same period of the previous year. In May, overseas workers remitted over $1 billion, which was the third consecutive month that remittances crossed this mark. The country received $1.05 billion, $1.03 billion and $1.05 billion in March, April and May respectively. Citing reasons for the sharp increase in remittances, analysts say that a crackdown on the illegal Hundi and Hawala money transfer systems, swift processing and transfer of money by the banking channel and incentives for overseas Pakistanis have encouraged them to utilise legal channels.

The flow of charity money after last summer floods has also given a boost to the remittances this year, they say. In the July–May period, remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries were $2.38 billion, $2.33 billion, $1.86 billion, $1.18 billion, $1.09 billion and $320.93 million respectively. In comparison, remittances stood at $1.72 billion, $1.84 billion, $1.61 billion, $1.13 billion, $793.91 million and $229.74 million respectively in July–May 2009–10. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the 11 months amounted to $926.86 million against $740.96 million in the same period last year.

http://en.wikipedia.org/wiki/Economy_of_Pakistan#Foreign_trade.2C_remittances.2C_aid.2C_and_investment