Record remittances signal disaster: govt

[LahoreEstate]

Sunday, April 12, 2009
By Saad Hasan

KARACHI: A 23 per cent increase in remittances sent home by overseas Pakistanis during last month could actually be a sign of increasing joblessness amid a global economic recession, top government officials warned.

The State Bank of Pakistan (SBP) on Saturday reported that remittances had shot up to $739.43 million in March 2009 compared to $602.21m recorded in the same month of previous year.

“This could lead to a tsunami of jobless people approaching us,” Farooq Sattar, Federal Minister for Overseas Pakistanis, told The News. “It seems people who have lost work abroad are moving their capital back home.”

Even though, he said, there were no indications of any large number of expatriates returning but his ministry had already alerted the authorities about a possible ‘storm’. “I have written to Foreign Minister Shah Mehmood Qureshi to apprise him in this regard.”

In its second quarterly economic review report, the SBP has also cautioned the government against too much reliance on remittances to meet the current account deficit.

Finance Adviser Shaukat Tarin was also skeptical about the record increase in remittances during a single month. “I fear these numbers indicate that people who have lost their jobs abroad might be transferring their belongings back to Pakistan,” he told newsmen earlier in the day.

During July-March 2008-09, remittances swelled to $5.65 billion from $4.7bn in the same period of previous year. Highest amount of $1.29 billion was received from the US, the global powerhouse where hundreds of thousands of people have been sacked in the past few months.

According to a 2004 report of the Ministry of Overseas Pakistanis, the number of expatriates is four million but Farooq Sattar said the figure had crossed well over 5 million.

Abdullah Butt, who represents the Friends of Pakistan, a body of overseas Pakistanis, said people based in the US, UK and UAE were feeling very insecure about their future amid massive job cuts.

“We held a convention in the US during February and there was strong urge among Pakistanis (to come back),” he said, adding “they now feel unprotected.”

About substantial increase in remittances, he said, people were depositing their savings in Pakistani banks, which were offering better returns. “Banks here are relatively better off.”

He said higher remittances might be good for the country in the short-term but results could be negative in the months and years to come. “It would be definitely devastating for the country in the long run.”

Pakistan subscribed to a $7.6 billion IMF loan late last year to avert a balance of payments crisis, which was caused by a huge trade deficit and falling foreign inflows.

http://www.thenews.com.pk/daily_detail.asp?id=171951