Remittances Press Material

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The NewsFriday March 01, 2013

Technologydriven money transfer on the rise:

experts

LAHORE: Technology-driven money transfer has become a way of life, especially the

success story of the cellular companies-led mobile payments that has compelled leading

banks to launch smartphone-centric form of payments.

This was the crux of presentations delivered at a technical session on Remittances and mobilebanking, which was held as part of the third international conference on business management(ICoBM-2013) under the aegis of the University of Management and Technology (UMT).

During his presentation, Qasif Shahid, executive vice president and head of remote banking andbusiness development, MCB Bank Ltd, said that following the success of easy-paisa venture, thebanking industry has been left with no other option but to follow the suit.

It has virtually ignited a mobile-led banking transformation in the banking sector, he said, addingthat unlike the cellular phone sector, banks are eying high-end market, while launching mobile-led banking.

Being sixth most populous country of the world, Pakistan is ideally pitched for expandingmobile-based banking services, he said.

There are five operators in the country that issued close to 130 million SIMs. Massive growth ofmobile sector resulted in around 70 percent tele-density, he said.

Shahid said that 40 banks in the country with 10,000 branches and 30 million accounts, representbanking penetration at 15 percent. The 90 percent plus adult population with digital identitycards provides secure foundation for mobile banking, he said.

Moreover, he said, majority of this potential customer base is numerically literate and familiarwith the English syntax, while 60 percent population is under the age of 25. He said solidbranchless banking regulations and framework is already in place. Such factors indicate a fastapproaching financial inclusion tsunami in the banking sector of the country, he said.

Talking about other appealing facts, Shahid said that mobile payments promise to bring 20percent lower customer churn, while average revenue per user (ARPU) is as high as 20 percent.


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As many as eight to 10 percent gain in the market share is envisioned, while there is three to fivepercent savings in operational costs with the help of mobile banking, he said.

Shahid said, in fact, it is essentially not the technology but the behaviour, which matters as far assuccess of mobile banking is concerned.

Hamid Farid, regional director of Pakistan and Afghanistan at Western Union, said that afterbanks, his company is the largest processor of digital money transfers globally, working in 202countries and territories.

He said that his company provides mobile-to-cash, cash-to-mobile and mobile-to-mobile moneytransfer facilities, connecting people living in the far-flung areas of the world.

Owais Yusuf, business development manager, Habib Qatar International Exchange Pakistan, saidthat his company was established in Doha, Qatar in 1978 and it deals with more than 500,000customers per annum.

He said that home remittances happened to be a vital economic lifeline for Pakistan. Remittanceinflow is six percent of GDP of Pakistan, four percent of GDP of India and 11 percent of GDP ofBangladesh.

He said that the growth of home remittances in Pakistan is tremendous. Introduction of exchangecompanies by the State Bank of Pakistan (SBP) in 2002 helped accelerate the growth rate ofremittances from fiscal year 2002 at 29 percent per annum.

Sajjad Arif, head of audit and compliance, H&H Exchange Company, said that Pakistan is one ofthe five leading countries having inward remittances, which provides strong support to its ailing

economy.

These inward remittances play a major role in managing the current account, particularly afterexports and foreign direct investment have shown downward trends over the years.

Pakistans inward remittances for 2000 was $1 billion that increased to $13.30 billion in the last fiscal

year, he added.

Business RecorderTuesday February 26, 2013Directorate of NSs planning to launch Islamic bonds:

Rs 224 billion investment target achieved


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Directorate of National Savings (NSs) has successfully achieved its annual investment target of Rs 224billion investment and now planning to launch Islamic bonds. Talking to media person at Karachi officeon Monday, Director General National Savings, Zafar M Sheikh, said that so far some Rs 275 billion ofnew investment had been attracted by the Directorate against the target of Rs 224 billion set for thecurrent fiscal year 2012-2013.

"We have achieved this milestone with the support of energetic team and we are expecting moreinvestment in the remaining period of current fiscal year," he added. Talking about the performance of theKarachi region, he said that Karachi was still leading all offices with a share of Rs 127 billion in total newinvestment of current fiscal year.

He said that the Directorate was also planning to launch Islamic mode of instrument with an aim to attractthe segment of society, which want Islamic investment and financing. "We have already submittedproposal of Islamic Bonds and likely to formally issue these bonds by the end of December 2013," hementioned. Zafar said that National Savings was playing a vital role in development of the economybesides catering the financial needs of the federal government.

"National Savings is also interested to start home remittances schemes to facilitate the overseas Pakistanis

and their families in Pakistan. "Under the project some 400 offices will also distribute the remittances sentby overseas Pakistanis," he mentioned. As shortage of staff was causing hurdles in launching newprojects, therefore it has been decided to appoint some 1200 new staff during the next six months, takingthe total strength of the National Savings to 5500, he added.

Zafar said that student bonds had received very positive response and target of Rs 2.5 billion wasachieved during the initial weeks of the launch. "After the first successful launch of student bonds now itwill be launched soon with a target of Rs 5 billion," he informed. He said that currently saving to GDPratio was about 13 percent and some concrete efforts were required to raise it to 20 percent.

External sector performs better

EXPORT earnings and home remittances were higher and foreign investment also

witnessed a rising trend in first seven months of this fiscal year, compared to the same

period last year.

Consequently the current account posted a small surplus against a huge deficit in the year-agoperiod, and the overall balance of payments also shrank to one-third over the comparative period.

Inflation in January inched up to eight per cent plus, chiefly due to higher food prices providing a

key justification to SBP to keep its reverse repo rate flat at 9.5 per cent for February-March.Large-scale manufacturing growth maintained the rising trend in Decemberthe latestmonth for which data is availableand overall LSM expansion in 1HFY13 was about threetimes higher than what it was during 1HFY12. This was seen as one of the benefits of SBPpolicy rate easing of 250 basis points between August and December 2012.

Some of the industries that posted double-digit expansion in output included liquefied petroleumgas, kerosene oil and high-speed diesel, paper and board, some chemical, food and


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pharmaceutical items, iron coils, sheets and stripes, buses, cooking oil, blended tea, wheatthrashers, power looms, tractors, electronic transformers and power generating machines.

The list of the industries that saw double-digit contraction in production is shorter, but includesmajor ones like furnace oil, sugar, nitrogen fertiliser, pig iron, trucks, jeeps and cars and light

commercial vehicles, sugarcane machines, shuttleless looms and deep freezers, etc.

Rupee lost 3.8 per cent value against dollar between July 1, 2012 and February 20, 2013primarily due to external debt payments in the absence of fresh external borrowings but also dueto repatriation abroad of increasing profits and dividends of multinationals operating in thecountry.Reports of about half-a-billion dollars IMF loan repayment in February initially causedpanic in both interbank and open currency markets. But the central bank sprang into action: it notonly bought dollars from some selected banks but relevant officials also spoke to bankers andpersuaded them to remain calm and ignore speculation-driven import demand for dollars.

The central bank also issued stern warnings to exchange companies indulging in selling dollars at

the rates higher than the ones displayed at their outlets and also invited public complaints againstnon-compliance of this instruction. As a result not only the rupee recovered some of the initiallosses but the pressure on forward dollar buying also eased off. The rupee, however, lost abouthalf-a-per cent of its value against the dollar in the first three weeks of the month.

The rupee depreciation has accelerated encashment of overdue export bills and retarded growthin import bills thus contracting the trade deficit. But it has disturbed the budgeted projections ofthe cost of external debt payments in local currency thus contributing to expansion in fiscaldeficit. Lesserthan-targeted revenue collection is making the situation even more challenging.And fiscal authorities are relying on excessive borrowings from commercial banks.

Meanwhile, external debt payments and forex outflows through repatriation of dividends andearnings of multinational companies continue to squeeze foreign exchange reserves.

The KSE 100-index is still on the rise as it has been for quite some time and the interbank andopen currency markets are behaving in line with fundamentals.

Export earnings that showed a marginal year-on-year decline in July and August have been onthe rise since September 2012 and there are indications that the rising trend may continue on theback of better performance of textiles and food and of non-traditional items like cement andjewellery.

Senior officials of Trade Development Authority of Pakistan say overall FY13 exports areprojected to cross $25bn.

But textile millers say that a lower cotton crop this year, coupled with delays in shipments ofexport consignments due to frequent business closures and sits-in are frustrating their efforts toearn more foreign exchange.


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Whereas poor law and order situation is a common issue for all businessmen rice exporters saythat still-higher domestic prices due to fall in Basmati production may keep them from earningeven $2 billion during FY13.

Total inflows of home remittances in seven months to January have been higher in this year than

in the last year but monthly inflows in January alone shows a slight decline. Bankers andexecutives of foreign exchange companies say it is too early to interpret it as the onset of thedeclining trend.

Monthly remittances are down basically because of lower inflows from Dubai (which fell to$96 million in January 2013 from $124 million in January 2012). We have a history of muchwiderfluctuations (in remittances from Dubai). I dont think its a big deal, said an official ofNational Bank of Pakistan. But reports appearing in the Gulf media suggest that localisation ofjobs in Dubai and increasing availability of workforce from Bangladesh and other countries havestarted affecting earnings of Pakistanis living there.

Global financial crisis to have little impact onPakistan: SBP

KARACHI: The ongoing global financial crisis would have little impact on Pakistan as

compared to some of the other emerging market economies due to its relative isolation

from the international financial markets, and the basic nature of its exports, according to

the latest report issued by the central bank.

Pakistani banks and external sector are two possible channels through which the global financial

crisis can affect; however, in the current scenario, Pakistani banks are comparatively safe due tolimited exposure, while the crisis could have somehow positive implications for the externalsector, the State Bank of Pakistan said in its 2011-12 annual report released on Wednesday.

Giving rationale for the positive assumptions for the banking sector, the report said that only 101Pakistani banks branches, of 9,528, are based overseas and the share of overseas operations ofPakistani banks accounts for less than 10 percent of assets of the banking system.

Investments account for less than 20 percent of overseas operations and within the bankingsystem, only three big banks dominate the overseas operations, it said.The share of foreign currency deposits in total deposits is capped at 20 percent and the actualshare is around 13.5 percent, according to the report.

The report evaluates further impact of global economic slowdown on Pakistans trade account islikely to be neutral or positive, besides, saying a financial crisis may result in an increase ininward remittances.

Conversely, the financial account of the country is the most vulnerable to a global financialcrisis. However, since the surplus is already small, any further decline is likely to be very small.


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Pakistans exports are mainly less value-added, intermediate cotton products and primarycommodities, it said, adding that as the demand for these products is relatively income inelastic,so, making a sharp fall in exports is unlikely in response to fragile economic growth in theUnited States and Europe.

Pakistan has one of the lowest unit cost of comparable products in the region. Moreover, itsexports to Asian countriessuch as China, Afghanistan, the Middle East and Indiaareincreasing. Demand in these markets is relatively less affected by the financial crisis, accordingto the report.

Pakistans trade account can benefit from the fall in the international commodity prices,especially crude oil, which could decline in response to falling global demand in the event of afurther slowdown.

Sixty percent of Pakistans imports comprise raw materials or intermediate goods. A fall in theinternational commodity prices could substantially reduce the countrys import bill. Thus, ifexports stay at the current level and import bill falls, Pakistans external account stands to

benefit.

The inflow of workers remittances is expected to witness strong growth because of job lossesfor overseas Pakistani workers.

Remittances could increase as overseas Pakistanis benefit from depreciation of the localcurrency. Some overseas Pakistanis might consider this a good time to invest in their homecountry, the report said. In terms of financial accounts, the prospects for inflows onprivatisation proceeds or bond floatation in the global capital markets have downgraded during afinancial crisis.

Furthermore, private and bilateral loans could decline as donor countries face fiscal constraints;however, given that financial inflows are already negligible, further deterioration is likely to bemarginal, though the International Monetary Fund (IMF) repayments would keep reserves underpressure, it added.

Citing the IMF data, the State Bank said that the prospects for the world economy in 2012 werenot very promising to begin with. As the year progressed, downside risks to the anticipatedrecovery escalated due to the deepening Eurozone debt crisis, cuts in fiscal spending, andcontinued deleveraging by firms and households in the United States and other advancedeconomies.

The IMF has revised downward its projections for the world economic growth for 2012 and

2013. Growth rates for both advanced and emerging economies have been revised downwards.

Overall, the outlook for Europe remains bleak as most countries are expected to experience acontraction in GDP in 2012.

The economies of Brazil, China, particularly India, which have so far been the drivers of theglobal growth, are also slowing, it added.


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Microfinance banks key players in enhancing

financial inclusion process

KARACHI: Microfinance banks have emerged as key players in enhancing the process offinancial inclusion in Pakistan; however, the lack of funding resources, capacity-building

and product innovation remains the major challenges for the microfinance banking

industry, said experts.

Deposits are stable source of funding for the banks but, in terms of microfinance banks, by andlarge, the growth in deposit mobilisation seems to have been sluggish, they said. Consequently,these banks rely on subsidies and grants rather than becoming fully sustainable in generatingsubstantial internal funding, they added.

In addition, meeting capital adequacy requirement is also an important issue for the majority ofthe microfinance banks, said experts.

Presently, there are 10 full-fledged licensed microfinance banks operating in the country; sevenof them are nationwide, one is at a provincial level (Sindh), while the remaining two are district-based (Karachi district).

A general look at funding composition of the microfinance banks reveals that apart from a fewbanks, the deposits of most of the microfinance banks are less than the total loan they disbursedto various categories of borrowers. Therefore, it does not seem a profitable industry as comparedto commercial banking industry.The microfinance banks can accept and intermediate deposits from the people to finance theirloan portfolios, said experts. Moreover, some of the microfinance banks offer microinsurance in

the areas of life and health-servicing.

Microfinance banks are relatively new in the sector so it will take some time to create an impactand develop a public confidence; however, the microfinance banks are still able to mobilisearound 20 billion deposits as a whole, said M Mobeen Yaqoob, head of finance and accounts atthe Kashf Microfinance Bank Limited.The countrywide microfinance banks, as per the State Bank of Pakistan, are required to complywith the minimum capital requirement of Rs1 billion as of December 31, whereas, themicrofinance banks operating at the district level have to meet the minimum capital requirementof Rs300 million by the end of the year.As far as capital constraints are concerned, yes, initially a few banks do face problems of capital

adequacy ratio and paid-up requirements but with the support of the State Bank they are able tomanage the shortfall either through further investments or by a combination oftelecommunications and microfinance banking, which also give path to enter into branchlessbanking, said Yaqoob.

Of five major microfinance banks, three are profitable and growing their portfolio with theaverage annual rate of 35 percent, which is quite encouraging. After introduction of branchless


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banking (remittances, deposits, etc) and so far successful operation of it, the microfinance sectoris now getting matured and showing faster penetration in the industry, said Yaqoob.

The State Bank in its Development Finance Review for the period April-June 2012 issuedrecently mentioned that four microfinance banks have their paid-up capital equal to or exceedingRs1 billion.

The microfinance banks normally follow and maintain the benchmark of three percent non-performing loans but, in the past, they used to bear the hit due to calamities such as floods andearthquakes, he added.

With an impressive growth in branchless banking, the microfinance banks are capable todiversify their deposit portfolios. Savings are attracted by adopting new technologies andalternative delivery channels such as mobile phone and agent-banking. Through mobile bankingaccounts, money can be transferred and loan can be repaid to the microfinance creditors, saidNadeem Hussain, president and chief executive officer of Tameer Microfinance Bank.

According to estimates, around Rs1 billion worth of domestic remittances are channelised bymobile accounts across the country on monthly basis, said Hussain.He said the microfinancebanking sector of Pakistan has vast potential to attract foreign investment, therefore, strong andstrategic foreign players are coming here to explore opportunities in the sector.

There is a significant increase in the market share of regulated microfinance banks within theoverall microfinance sector, he said.Advans Microfinance Bank Limited has just been allowed tocommence business on January 3.

The microfinance banks continue to dominate the sector in terms of both, active borrowers andgross loan portfolio, with a market share of 42 percent and 56 percent, respectively during thethird quarter (July-September) of calendar year 2012, said a quarterly update on the microfinanceoutreach in Pakistan issued by Pakistan Microfinance Network (PMN).

Savings had increased by 10.11 percent to Rs20.13 billion by the end of the third quarter.Microfinance banks continue to hold the largest share in the value of savings (91 percent) mainlydue to an average saving balance of Rs10,000, which remains the highest among peer group.

Potential microfinance market in Pakistan is around 28-30 million people, of which only 2.4million are served by microfinance institutions and among them microfinance banks contributionis only of one million borrowers.

The agriculture sector dominates as the largest provider of employment in Pakistan, with a share

in the overall employment of 45 percent. Most of the microfinance banks operating in Pakistanare serving in the rural areas, obviously, due to high potential. They also showed their presencein remote areas.

The primary reason for this inclusion is that microfinance in Pakistan is still largely regarded as asocial service rather than a financial service. Furthermore, the small and medium enterprises,which constitutes 90 percent of business in Pakistan and is regarded as an important instrument


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of employment promotion, is neither being served by mainstream banks nor the microfinancesector.

According to Small and Medium Enterprises Development Authority (Smeda), there areapproximately 3.2 million business enterprises in Pakistan, which employ 80 percent of the non-agricultural labour force and their share in the annual GDP is approximately 40 percent.

However, unlike large enterprises in the formal sector, a small and medium enterprise isconstrained by financial and other resources.

The SBP has recently allowed the microfinance banks for enterprise lending up to 500,000, sothere is a great opportunity in the sector to capture non-served SME sector as well. So, with themicrofinance sector penetration of only eight percent, there is still a large potential market formicrofinance in Pakistan to be captured by 10 microfinance banks.

The State Bank of Pakistan has taken several measures for smooth functioning of themicrofinance banks such as it introduced an authenticated information sharing mechanism such

as Microfinance - exclusive Credit Information Bureau recently to reduce the credit risk cost ofthe lenders, besides lowering the loan price for the borrowers.

This measure will improve the credit quality and also credit risk cost depending upon the servicefee levied by the regulators.

The International Strengthening Fund (ISF) has approved Rs632 million for 13 microfinanceproviders, including top- and middle-tier finance banks and microfinance institutions. The ISFhas also provided a 10 million pounds facility, aiming at raising commercial debt from non-banksources and to diversify sources of commercial capital for microfinance providers.

The SBP also allowed microfinance providers to mobilise funds from non-bank sources andcapital markets.

Business RecorderTuesday January 15, 2013

Remittances to swell by $16b by end of FY13

KARACHI - Economic observers expect the inflow of ever-increasing worker remittances to thecountry rise to a historic $ 16 billion by the end of this financial year.

Home remittances continue to remain upbeat reaching the level of USD 7.1 billion during thefirst six months of FY13, said analysts at InvestCap Research.


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Terming it as one of the major supporting tools for the current deficit, the remittances fromexpatriates, they said, continued its upward trajectory.

During the first half of FY13, remittances posted a colossal growth of 12.5% YoY to USD 7.12billion, in absolute terms increasing by USD 791 million.

However, on a monthly basis, the head registered a growth of 11% reaching USD 1.13billion inDecember 2012.

Such increase was however misleading, emanating from a low base effect of November, 2012,rather than depicting an actual increasing trend.

The country witnessed a huge influx of remittances, touching USD 1.37 b, in October, 2012,due to the Eid factor, viewed Abdul Azeem at the InvestCap Research.

Following this, the analyst said, remittances in November, 2012, remained extraordinarilydepressed at the level of USD 1.02 billion thus leading to a low base effect in December, 2012.

The huge chunk of remittances received from the Middle East continued to play a significant rolein the overall inflows into the country.

Within this region, the major oil economy, Saudi Arabia remained the key contributor with 28%weight in total remittances; remittances from Saudi Arabia posted a growth of 18% YoY to USD1.96 billion during the first half of FY13. One of the strongest economies of the world, SaudiArabia continued to import employees from Pakistan, therefore, a positive impact was observedin remittances from this country.

Another region of the Middle East, United Arab Emirates also remained a key source ofremittances as it maintained 21% weight in total remittances from where the over all remittances

increased by 3% YoY to USD 1.46 billion in the first half of FY13.

Amongst the Western countries, USA was the most important contributor, accounting for 16%share in the total home remittances although the growth was flat (0.5% YoY) but inflow of USD1.16 billion was witnessed during the first six months of FY13. Furthermore, remittances comingin from the UK experienced massive growth of 38% YoY during the same period. UK rankedsecond amongst the major contributors to increase in remittances in the first six months of FY13.

We expect the consistent upward trend in remittances to provide support to the current account(C/A) during the remaining period of FY13, Azeem said.

However, he warned, IMF payments were likely to exert pressure on the current account deficit,as the country has to pay USD 1.7billion during the second half of FY13.

Although, lower imports and rising exports continue supporting the trade deficit, in the latter halfof FY13, we expect a significant draw back to be evident in the form of shortage of gas,absorbing any such positives. We foresee such shortage to injure exports of the country, mainlythe textile sector, being a major contributor to the countrys exports.


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DawnTuesday January 15, 2013

Delay in remitting export proceeds

KARACHI, Jan 14: Exporters delaying tactics to remit the export proceeds back home

have been causing serious problem for the government, said banking sources on Monday .

Bankers said the current vulnerable exchange rate regime, which put the local currency onpersistent depreciating order, had attraction for the exporters as they could earn more with delayof each day.

Complaints against exporters were increasing each year and the State Bank had continuouslybeen running after them and issuing show-cause notices to them. The central bank also heldbanks responsible for slow remittances of export proceeds.

The State Bank recently published figures regarding the complaints launched against theexporters not remitting proceeds in the stipulated time.

The State Bank noted the number of complaints jumped by over 35 per cent in the last fiscal.

The State Bank said during FY12, as a result of rigorous follow-up and monitoring of exportoverdue cases, delinquent exporters have been served 18054 show cause notices for speedy

realization of overdue export proceeds compared to 10096 notices in the same period last year.

The central bank said during FY12 aggregate cases referred to FEAD (Foreign ExchangeAdjudication Department) rose by 35.5 per cent compared to same period last year.

Currency experts believe that the local currency which bounced back last month after reachingclose to Rs100 against a US dollar, may not sustain for longer period which encourages theexporters to delay the remittances of export proceeds.

The latest report showed that the six-month exports rose 7.58 per cent to $12.051 billioncompared to the same period last year. Bankers said the entire amount is not remitted instipulated time which weakens the reserve position and weakens the exchange rate.

Despite issuance of thousands of show-cause notices the exporters have been practicing the samedelayed tactics for past many years. Bankers said no serious action was taken against theexporters.

The delayed remittances of export proceeds mainly hit the exchange rate, which is the gain forthe exporters.


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The State Bank said it had undertaken several measures for speedy and timely lodging ofcomplaints against exporters upon their failure to repatriate the export proceeds within stipulatedtimeframe.

DawnSunday January 13, 2013

$48bn remittances:

Rupee depreciates 58pc in five years

KARACHI, Jan 12: As government is about to complete its five-year tenure, amazing

economic figures appeared on official documents, showing failures of economic managers.

The State Bank of Pakistans January Statistical Bulletin reported that overseas Pakistanis sent$48 billion during four-and-a-half years, but this could neither control free fall of local currencyagainst major currencies, nor it helped improve foreign exchange reserves.

It also failed to improve poor external accounts position.

The rupee-dollar parity four years back was 62. On Saturday, the dollar was changing hands atRs98.

The report reveals that during this period, local currency depreciated by 58 per cent against thedollar which changed the economy based on highly vulnerable exchange regime.

Massive interest-free remittances even failed to change the pale face of the currency and overalleconomy.

Remittances continued to rise. In 2008-09, these stood at $7.81 billion, in 2009-10, the figureincreased to $8.9 billion, $11.2 billion in 2010-11, and $13.2 billion in 2011-12.

During the first half of the current year, remittances rose to $7 billion.

In case of rupee-dollar parity, the depreciation of local currency was huge which made the costof imports much higher only to push up inflation.

The 58 per cent deprecation of rupee during this period kept pressure on economy while businesscommunity lost faith in local currency.


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There is a general understanding that the business community calculates profit and loss in termsof dollars despite trading in the localcurrency. Most of them, including some common people, prefer keeping their deposits in dollars.

It is not a surprise that dollars held by private banks have been rising compared to the central

bank.

Since July 2011, reserves of the central bank fell from $14.775 billion to $8.769 billion on Jan 4this year.

However, reserves of commercial banks rose to $4.789 billion in January this year as against$3.519 billion in July 2011.

The economics managers failed to even manage the current account with the help of huge inflowof $48 billion and another help of over $8 billion from the IMF during this period.

Last year the current account deficit was $4.6 billion, and there seems no chance of improvementthis year as five months data shows that the current account was in deficit this year.

Amid all these inefficiencies, the external debt of the country is also rising which has touched thepeak of $66 billion.

Five years back it was about $44 billion.

It has become extremely difficult for the country to service its external debt that was around $4billion per year and is rising with the increasing debt.

A currency expert said the huge inflow of remittances could be used to bring a growth ineconomy that could help the country to improve its external accounts position.

Business RecorderMonday January 14, 2013

Shielding the saviourremittances

Being amongst the top 10 recipients of migrant remittances does not fend off the risks that tag along.

With greater reliance on ever growing home remittances to drive up the foreign exchange reserves, the

regulators must keep sharpening the claws: the responsibility to tame down the $4 billion plus informal

market for remittances is indubitable.


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More specifically, the tightening of the screws of the system is necessary as remittance receipts are

undoubtedly a cushion for the much needed foreign exchange reserves. Despite economic slowdown

both in United States and countries in the European Union, the expatriates sent in 12.5 percent more

money during the first half of FY13 touching the $7 billion mark, compared to similar period last year.

And the optimistic outlook suggests that the ongoing growth in remittances from overseas Pakistanis

will cross another psychological mark of $16 billion. This is in sync with the World Banks latest forecast

where official remittances flow to developing countries would rise by eight percent and 10 percent year

on year in 2013 and 2014 respectively.

In the past, remittances have been the most stable inflows compared to other forms of foreign

exchange inflows like FDI, portfolio investment, and ODA. According to an IMF paper, the receipts from

overseas Pakistanis are large enough to finance around 80 percent of the countrys oil imports and a save

the current account.

Where many experts have the opposing opinion, many also reckon that the relaxed monetary policy in

the country might just make Pakistanis residing abroad hesitant in shifting their savings to the country.

Majority of the money from abroad is kept as risk free deposits.

Another holding-back factor is the inflation and the depreciating rupee versus the dollar that affects the

real value of this precious foreign exchange. And this is why a trend towards maintaining a foreign

currency account is developing.

Tightening the economic and institutional noose makes a lot of sense amid exogenous threats like the

recent decision of the Saudi government for the imposition of tax on non-Saudi workers earnings. If not

in the short term, the shift in the Saudi tax regime will adversely affect the inflows in the country in the

medium to long term.

The NewsFriday December 21, 2012

New Saudi tax measures to trim Pakistans

remittances

KARACHI: The latest decision of the government of Saudi Arabia regarding imposition of tax on theearnings of non-Saudi workers may have an impact of $370 million on remittances inflows to Pakistan,

said analysts on Thursday.

There would be no immediate impact on inflows of remittances to Pakistan in FY13, however, it is

estimated that the impact would reach $370 million in the following year, said Abdul Azeem, an analyst

at InvestCap Research.


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According to the Bureau of Emigration and Overseas Employment (BEOE), Saudi Arabia has become the

largest market for Pakistani workers in the world.

Remittances from the Kingdom grew by 10-year compound annual growth rate of 24 percent and

reached $3.7 billion in FY12. The imposition of tax on non-Saudis hints that immediate impact on

remittances flow may not be very significant unless all the stakeholders (foreign companies in Saudi

Arabia) reach any consciences, said the analyst. Last month, The Saudi Arabian government announced

that Saudi Arabia-based private sector companies that employ more foreigners than Saudi nationals will

have to pay 200 riyals or $52 a month for excess of each non-Saudi.

The measure aims at helping provide Saudi nationals with more employment opportunities.

There are more than 1.5 million Pakistanis working in Saudi Arabia and the number is consistently

increasing, said analyst, adding that the decision would directly impact the remittances to the parent

country, ie, Pakistan.

Around 80 percent of Pakistanis in Saudi Arabia earn less than 2,500 riyals per month and, under the

new tax regime, they would have to bear more than 10 percent negative impact on their earnings, whichresultantly will hurt their ability to remit funds.

If we take $3.8 billion as proxy for FY13, then during the aforementioned period the estimated decline

in the amount to be remitted from Saudi Arabia settles at $184 million, said analyst.

Low interest rate may hamper growth of remittances:

experts

KARACHI: Experts said low interest rate could slightly hamper the growth of workers remittances. As

remittances are an important and stable source of foreign exchange inflows than direct and portfolio

investments for Pakistan, they are of the view that if the State Bank of Pakistan (SBP) continues with its

soft monetary policy stance, then it seems that the overseas Pakistanis will be reluctant to transfer their

accumulated savings to the country.

Moreover, low or negative rate of return on investments in government papers (market treasury bills)

would minimise the likelihood of investments in them by Pakistani expatriates working in Saudi Arabia,

Gulf Cooperation Council (GCC), the US and Europe., they said, adding the financial returns have been

the major driver for overseas Pakistanis to remit their money. Another driving factor is the real value of

remittances,-which depends on the exchange rate and inflation in the recipients country.

Citing a working paper of the International Monetary Fund (IMF), experts further said investments of

remittances are determined by the interest rate in the recipients country. Investment return portfolio

of Pakistanis remitters shows that they keep 80 percent of their savings in deposits, which are

considered risk-free, and the remaining in equities, they said. Foreign investors will not be ready to

park their money into treasury bills if they earn small or negative profit rate on a 1-year t-bill. Its a total


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loss, resulting in decline in savings as well, said Sayem Ali, a senior economist at Standard Chartered

Bank.

However, some experts believe low interest will not hold back the flows of workers remittances, saying

as the high skilled immigrants are expected to continue sending remittances to their families back in

Pakistan for meeting their household expenditures.

Dr. Salman Shah, former advisor to Prime Minister on Finance, said: The SBP will set upcoming

monetary policy with keeping inflationary trends and the prospects of foreign currency flows under

consideration.

Foreign inflows mismatch outflows, so if the overdue installment of the coalition support fund is not

released by the US within the course of upcoming two months, then the SBP may go for maintaining the

status quo or increasing discount rate, he added.

In addition, the IMF paper also stated that the remittances provide enough foreign exchange to finance

almost 80 percent of Pakistans oil imports.

Historically, remittances have been relatively stable compared to direct investment and portfolio

inflows. More recently, remittances have also been more stable than aid inflows. The growing

remittances have become an important stabiliser for the countrys external account balance.

During July-November, 2013, remittances witnessed a 15 percent increase, according to the SBP.

Overseas Pakistani workers remitted an amount of $5.982 billion in the first five months of the current

fiscal year. An amount of $1 billion was remitted in November 2012. However, this value was at $1.365

billion in October 2012.

We can see shift in the investment approach of overseas Pakistanis. Now, they prefer to deposit money

in dollar accounts instead of holding assets in rupee due to exchange rate gains. Pak rupee hasdepreciated by 9 percent within last one year, Ali said.

He said that pressure on the rupee encouraged a buildup in foreign currency accounts as such deposits

surged to $4.8 billion within the course of the last calendar year.

The SBP data revealed that foreign currency deposits increased by $752 million during July-March FY12

compared with a rise of $349.5 million during the corresponding period last fiscal year.

Workers foreign remittances supported increase in banking sector deposits. Besides, strong growth in

the remittances and Pak rupee depreciation of 4.6 percent in the second half of 2011 pushed up foreign

currency deposits significantly.

Business RecorderWednesday December 12, 2012


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Oil and rupee depreciation driving

remittances higher

While rupee weakening has been gnawing the economy, the gyrations of the rupee-dollar exchange rate

has affected remittances through its impacts on consumption and investment objectives.

The surge in remittances over the years can in part be explained by the sale-effect where the migrants

send in their savings to purchase assets back home. The depreciation of South Asian currencies has been

highlighted an important factor in spurring remittance growth in the region by the World Bank in its

latest forecast.

At the same time, higher oil prices have supported the outflow of remittances from the GCC countries to

countries especially in the South Asian region. This has rendered positive for Pakistan as around 60

percent of the precious foreign exchange from the residents abroad flies in from Saudi Arabia, UAE,

Dubai and other GCC countries.

Besides the rupee weakening and remittances moving somewhat in tandem with the oil prices, another

key driver of remittance flows is the cost of sending.

Generally in ascendant in developed world, the average cost of remitting to Pakistan has been

significantly lower than the other regions. Hard earned cash entering the country from Saudi Arabia and

United Arab Emirates stand among the least costly corridors.

Based on World Banks latest migration and development brief, the global average price of remittances

has skidded from 9.81 percent in CY08 to 8.96 percent towards the close of CY12. Regional disparities

show that sending money to South Asia at 6.5 percent of the amount transferred is half of what it takes

to send money to Sub Sahara Africa, the most expensive region.

In short, a cocktail of the three, oil, exchange rate and price, explains most of the ascendant in the

foreign currency receipts which increased by 14 percent YoY during the first five months of FY13.

The World Bank has projected the remittance flow to developing countries to grow by 6.5 percent to

reach $406 billion in CY12 with specific emphasis on South Asian giants. With the receipts reaching

$12.85 billion during 11MCY12, the forecast for Pakistan to cross $14 billion mark by the end of 2012

seems destined.

DawnTuesday December 11, 2012

Remittances surge, rupee at new low


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KARACHI, Dec 10: Overseas Pakistani workers sent 14 per cent higher remittances in the first five

months of the current fiscal year, but inflows could not stop dollar from setting another record against

the local currency on Monday.

Despite higher inflows from overseas Pakistanis, exchange rate remained vulnerable under rising

pressure of the greenback that crossed Rs97 for the first time.

The State Bank reported that during July-Nov remittances rose to $5.982 billion compared with $5.239

billion in the same period of last year, an increase of 14.16 per cent.

In the wake of huge trade gap which significantly reduced the current account surplus during the four

months, remittances are a big hope for survival of economy.

The melting down of foreign exchange reserves with no inflows in the picture, the country has been

struggling to win IMF for another loan agreement that it did four years back.

Further details of State Banks report showed that remittances in November declined by 25 per cent

compared to October.

Bankers said the October remittances were very high because of Eid remittances.

The US is still one of the top three countries sending remittances to Pakistan. During the five months,

Pakistanis in US sent

$993 million, 1.8 per cent higher than the previous year.

However, highest remittances sent from Saudi Arabia that totaled as $1.609 billion with an increase of

18 per cent.

United Arab Emirates sent $1.240 billion, higher by 6.29 per cent during the five months. It was noted

that remittances growth was robust last year since the five months growth was 18.33 per cent whilethis year growth is 14.16 per cent.

Despite this positive improvement, currency market reacted negatively and the greenback crossed the

line of Rs97, reflecting the weakness of the currency as well as economy.

We traded dollar in the range of Rs97.02-05 in the second session of the market, said Atif Ahmed, a

currency dealer in the inter-bank market.

The foreign exchange reserves at the end November slipped to $8.705 billion not enough to continue to

pay IMF installments and support the wide trade gap.

The ultimate result would be higher current account deficit that may bring the country at the verge of

default.

The country witnessed a huge trade gap of $15.8 billion last year while the current account was in deficit

with $4.634 billion the same year.


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Analysts believe the country would see larger trade gap this year and that could push the current

account into a large pool of deficit, which is so far surplus in four months.

DawnWednesday November 28, 2012Remittances help reduce poverty: UN

UNITED NATIONS, Nov 27: Remittances to the worlds least developed countries (LDCs) must play a

greater role in reducing poverty while also empowering those countries economies to grow, a new

United Nations report said.

In the 2012 edition of its LDC report, the UN Conference on Trade and Development (Unctad) notes that

with remittances forecast to grow over the medium term, the worlds poorest nations should ensure

better banking and financing services to allow for greater domestic investment, small business

development and job creation among their increasingly urbanized populations.

Remittances have grown eight-fold between 1990 and 2011, and are now worth $27bn on a global scale,

according to the report.

Moreover, they have continued to rise despite the impediments posed by the 2008 global economic

crisis and consequent fears of financial stagnation.

The report entitled harnessing remittances and diaspora knowledge to build productive capacities also

asks governments to reduce the transfer costs associated with remittances, which often run as high as

12pc.

In 2010, for instance, money sent to sub-Saharan Africa could have generated an estimated $6bn for

recipients if the costs associated with the transfers had been lower.

The potential pay-off for LDCs posed by remittances is significant, the report notes, considering that

some 27.5 million LDC citizens live and work abroad. Over the past decade, remittances have steadily

surpassed the value of foreign direct investment to LDCs.

Unctad warns that with the growing danger of global economic stagnation and deflation, LDCs mustescalate their policy rethink of how remittances can promote industrial development and structural

transformation through a freer channel of investment.

This may entail a range of policy interventions, such as domestic and regional development policies

aimed at inducing private investments, the UN report notes, adding that new measures could also

include appropriate financial and regulatory reforms designed to reduce transaction costs and promote

greater financial inclusions and credit provision for small- and medium-sized enterprises.


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While money flows from LDC migrants are crucial to the advancement of the worlds poorest nations, it

is the migrants very departure which often contributes to further debilitation of an LDCs chances of

development.

According to the Unctad report, the impact of `brain drain on LDC countries appears to reinforce

international inequalities in the availability of qualified personnel, and to damage LDCs prospects for

long-term economic growth.

Thursday November 22, 2012

Remittances seen at $14bn in 2012

ISLAMABAD, Nov 21: The World Bank has estimated that the flow of remittances to Pakistan is expected

to be $14 billion in 2012, becoming among the top ten recipients in the world.

The top five countries are India with $70 billion, followed by China ($66 billion), Philippines ($24 billion),

Mexico ($24 billion) and Nigeria ($21 billion), according to the new World Bank report on global

migration and remittances.

Egypt has been placed at number six with $18 billion followed by Pakistan and Bangladesh $14 billion

each, Viet Nam ($9 billion) and Lebanon ($7 billion).

The report also discussed the implementation of the new remittance regulations in the United States

and Europe and concluded that these regulations are likely to lower remittance costs in the long run by

increasing competition and improving consumer protection.

New US remittance transfer rule which will go into effect on February 7, 2013, is expected to increase

transparency in pricing, competition and innovation in the remittance market not only in the US but also

in the rest of the world.

According to the report, remittance flows to the developing world are expected to exceed earlier

estimates and total $406 billion this year, an increase of 6.5 percent over the previous year.

Remittances to developing countries are projected to grow by 7.9 percent in 2013, 10.1 percent in 2014

and 10.7 percent in 2015 to reach $534 billion in 2015.

Worldwide remittances, including those to high-income countries, are expected to total $534 billion in

2012, and projected togrow to $685 billion in 2015, according to the latest issue of the World Bank Migration andDevelopment Brief.

The News


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Tuesday November 13, 2012

Remittances inflows hit record high of $1.365bn in

October

KARACHI: Overseas Pakistani workers remitted $1.365 billion in October, 2012 as against $1.017 billion

sent in the same month of the last fiscal year, showing a tremendous jump of $347.23 million or 34.11

percent, the central bank reported on Monday.

The previous highest amount remitted in a single month by overseas Pakistanis was recorded in August,

2011 when they sent home $1.310 billion. Pakistan received $4.964 billion in remittances inflows in the

first four months (July October) of the current fiscal year compared with $4.315 billion received during

the same period of the last fiscal year.

The remittances received from all countries of the world showed an impressive growth last month. In

October 2012, the inflow of remittances from Saudi Arabia, UAE, USA, UK, GCC countries (including

Bahrain, Kuwait, Qatar and Oman), and EU countries amounted to $347.52 million, $293.74 million,

$217.56 million, $197.18 million, $163.37 million and $37.48 million respectively as compared with the

inflow of $291.20 million, $216.50 million, $167.60 million, $117.56 million, $131.54 million and $28.08

million respectively in October, 2011.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during

the fourth month of the current fiscal year (FY13) amounted to $108.25 million as against $65.39 million

received in the same month of the last fiscal year (FY12).

The inflow of remittances from July to October, 2012 from Saudi Arabia, UAE, USA, UK, GCC countries

(including Bahrain, Kuwait, Qatar and Oman), and EU countries amounted to $1,308.61 million,

$1,046.83 million, $841.28 million, $697.33 million, $559.51 million and $134.53 million respectively as

compared with the inflow of $1,145.38 million, $963.12 million, $795.35 million, $486.92 million,

$486.15 million and $129.81 million respectively in the same period last year.


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Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during

the first four months of the current fiscal year amounted to $ 376.12 million as against $308.34 million

received in the first four months of last fiscal year.

The monthly average remittances for July to October 2012 come out to $1,241.05 million as compared

to $1,078.77 million during the corresponding period of the last fiscal year.

The government of Pakistan had launched a joint initiative through State Bank of Pakistan, Ministry of

Overseas Pakistanis and the Ministry of Finance, called Pakistan Remittance Initiative (PRI), in April 2009.

This initiative has been taken to support faster, cheaper, convenient and efficient flow of remittances.

Home Remittance Cell, Corporate Banking Group teamvisits MENA Region

UBL presently enjoys the market leader position in Home Remittances business with over 22%market share. With a view to further augment our presence in remittances concentrated corridors,

recently a UBL team comprising ofMr. Hassan Raza, GE-Corporate Banking Group along with Mr.Asif Shahzad, Divisional Head-CMT & HRC and Mr. Saad Kaleem, Head Products & Sales, CMT& HRC visited various countries in the MENA region for business development.

During their visit to Kingdom of Saudi Arabia the team met the senior management of Bank Albilad.UBL is currently enjoying the number one correspondent relationship status for them in Pakistan.Mr. Sami Hamed Al Rajhi, Head of Enjaz Divisional of Bank Albilad awarded this honor to the UBLteam. Later on a meeting was arranged with the CEO of Bank Albilad, Mr. Khalid S. Al Jasser todiscuss and review UBL / Enjaz Remittances Business. The UBL team also visited variousPakistani concentrated areas / markets to review the marketing initiatives. The same team also

visited other banks including Al Rajhi Bank, National Commercial Bank and Arab National Bank todiscuss bilateral business developments and further strategic review.

The NewsTuesday October 23, 2012

Remittances should be used as stepping stone for

economic uplift

LAHORE: Remittances should be utilised as a stepping stone for the economic uplift of the

country rather than as the sole means for long-term source of income and foreign

exchange, said speakers at a discussion on remittances organised by the Punjab Economic

Forum (PEF).

The participants included economists, entrepreneurs and overseas Pakistanis. Remittances arenow the top foreign exchange source for Pakistan, even higher than that earned through textile


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exports, said senior economist Naveed Anwar Khan. He said that unfortunately theseremittances have not been able to burrow into the formal economy to make a structural impact.If anything, they perpetuate the uneven economic ownership already prevalent in the country,he added.

Khan said successive governments in Pakistan try to send their workers abroad. This is not abad plan except for one vital detail that is clearly missing: none of the government hasdemonstrated any long-term plan for using the benefits of overseas labour to build their domesticeconomies, he said.

In fact, Pakistani planners base much of their economy planning on overseas remittances, heregretted. They appear to have become hooked on them as a long-term source of income, ratherthan as a means to build self-sufficiency, he added.

Chairman of PEF Nabeel Hashmi said the wasting of workers money is not Pakistan-specific asaccording to the International Labour Organisation (ILO) only a small percentage of remittances

are used for savings and productive investments - in other words, for activities with multipliereffects toward income and employment creation.

He said data of remittances use in Pakistan is not available but its use remains almost similar asin Bangladesh for with creditable research is available. He said research in Bangladesh showedthat only a small proportion (4.8 percent) of remittance money was used for investments inbusinesses.

The amount used for saving was only 3.8 percent while child education accounted for only 2.8percent of the invested remittances. These numbers point to one solid fact: exporting workers todeveloped countries does not qualitatively improve the economy of the countries that sent them,he added.

Zafar Iqbal, an overseas Pakistani currently visiting his relatives in Pakistan, said few overseasworkers are middle-class and perform reasonably well-paying professional work.

However, most overseas work is menial and labour-intensive, he said. He said these labourerssend most of their income back home to their families. He further said it is risky to depend onworkers remittances as a permanent source of foreign exchange.

Iqbal said many highly educated Pakistani families living abroad for decades are nowmillionaires and they have sentimental attachment with their home country. They should bemotivated, facilitated and encouraged through prudent incentives to bring investment in Pakistan,he said.

Good economic policy begins at home, not in sending workers abroad, no matter how green theproverbial grass may be at the other side, he said, urging the government to improvegovernance, transparency, rule of law and adherence to merit to attract highly talented overseasPakistanis back home.


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The NewsThursday October 11, 2012

Remittances surge to $3.6bn in first quarter

KARACHI: Remittances by overseas Pakistani workers rose by $301.91 million, or 9.16 percent,to $3.599 billion in the first quarter (July-September) of the current fiscal year as compared to$3.297 billion during the same period last year, according to the central bank on Wednesday.

Remittances from Arab countries continued to witness higher growth as Pakistan received a totalof $961.09 million from Saudi Arabia during July-August 2012 as compared to $854.18 millionin the same period last year.

Expatriates from the UAE remitted $753.08 million in July-September 2012 as against $746.62million during the same period last year.

According to the latest figures on workers remittances released by the State Bank of Pakistan(SBP), the inflows of remittances from the United States, the UK, GCC countries, includingBahrain, Kuwait, Qatar and Oman, and the EU countries amounted to $623.72 million, $500.15million, $396.14 million and $97.05 million, respectively as compared to $627.75 million,$369.36 million, $354.61 million and $101.73 million, respectively in July-September 2011.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries

during the first three months of the current fiscal year amounted to $267.88 million as against$242.95 million received in the first quarter of the last fiscal year.

The monthly average remittances for July-September quarter come out to be $1,199.70 millionas compared to $1,099.07 million during the corresponding period last year, it said.

A sum of $1,135.42 million was remitted by overseas Pakistanis last month as against $890.42million in the same month last year, depicting a growth of 27.52 percent.

In September, the inflows of remittances from Saudi Arabia, the UAE, United States, the UK,GCC countries, including Bahrain, Kuwait, Qatar and Oman, and the EU countries amounted to

$303.31 million, $247.28 million, $177.11 million, $166.09 million, $122.05 million and $33.48million, respectively as compared to $252.56 million, $194.51 million, $169.30 million, $86.91million, $103.85 million and $26.76 million, respectively in September 2011.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countriesduring the third month of the current fiscal year amounted to $86.10 million as against $56.53million received in the same month last year, it added


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DawnWednesday October 3, 2012

Nadra moves to facilitate remittances

ISLAMABAD, Oct 2: The National Database and Registration Authority (NADRA) on

Tuesday formally launched the National Cash Remittance Programme to facilitate

overseas Pakistanis.

Salient features of the programme include timely processing of transactions, safe and securehandling of cash, and confidentiality of data and transactions.

People across the country can now simply walk into NADRA centres and get their remitted

money from the designated network of NADRA outlets, said NADRA Chairman Tariq Malik atthe launch of the Smart Home Remittance Programme.

There are more than 117 NADRA Registration Centres designated all over Pakistan from whichthey can receive foreign remittances.

The remittance programme will enable NADRA centres to process inward home remittancesfrom overseas for the general public using smart national identity cards.

NADRA has successfully deployed infrastructure across the designated registration centres forfacilitating Pakistanis to receive funds in a safe and timely manner.

ID card is no more just an identity document, it is about entitlements, said NADRA Chairmanwhile promising that NADRA intends to roll out citizen centric smart e-governmentprogrammes.

The chairman expressed his resolve to further promote the facility to the remaining registrationcentres where the system was not currently available. He stated that foreign remittance is crucialto the sustainability of national economy, and NADRAs initiative is directly aimed atfacilitating and promoting the disbursement of money into Pakistan.

NADRAs services have assisted commercial banks to extend branch-less banking concept

without incurring additional expense on infrastructure as well as operational costs, thus creatinga win-win situation for all stakeholders.

UBL lauded by SBP at thePakistan Remittance Initiative (PRI) Award Ceremony for

2011


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An award ceremony was held recently at the Learning and Resource Centre, State Bank of Pakistan,Karachi to recognize the Pakistan Remittance Initiative taken by UBL for the cause of HomeRemittances for the year 2011.

Awards were given in different categories based upon various aspects of Remittance flows. Thecategories were as follows:

Best Domestic Branch Province-wise

Best Overseas Branch (UAE)

Best Processer at Home Remittance Cell (HRC)

Best IT support for Swift Remittance Delivery

The ceremony was chaired by the Honorable Governor SBP, Mr. Yasin Anwar who handed out theawards.

DawnTuesday August 14, 2012Remittances rise to $1.2bn

KARACHI: Remittances sent home by Pakistani overseas rose 9.89 per cent to $1.205

billion in the first month of 2012/13 fiscal year, compared with the same period last year,

the central bank said on Monday.

Remittances received from most countries showed growth during July 2012, according to theState Bank of Pakistan.

The inflow of remittances during July 2012 from Saudi Arabia, UAE, USA, UK, GCC countries(including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $349.66 million,$240.54 million, $215.30 million, $148.49 million, $140.36 million and $30.83 million, whileremittances received from Norway, Switzerland, Australia, Canada, Japan and other countriesduring the last month amounted to $79.53 million, SBP said in a statement.

SBP said continued growth in workers remittances is the result of efforts made by PakistanRemittance Initiative (PRI) in collaboration with other stakeholders to facilitate overseas

Pakistanis and their families back home.

Remittances from Pakistanis abroad rose 17.73 per cent to $13.186 billion in 2011-12, comparedwith $11.2 billion the previous year.

Since its inception, PRI has taken a number of steps to enhance flow of remittances throughformal channels which include: (a) preparation of national strategies on remittances (b) taking allnecessary steps to implement the overall strategy (c) playing an advisory role for the financial


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sector in terms of preparing a business case, relationship building with overseas correspondents,creating separate efficient remittance payment highways and (d) becoming a national focal pointfor overseas Pakistanis through its round-the-clock call centre (021-111-222-774) with toll-freelines and a separate web-site, etc.

Business RecorderThursday July 12, 2012

Remittances in the ascendant

The countrys external account concluded the fiscal year in a flimsy state. And had it not been for the

multitudes of Pakistanis residing abroad and sending back precious foreign exchange to the country, thesituation would have been much worse. Deserving a big round of applause, hard-earned money sent

home by overseas Pakistani totalled to a sizeable $13 billion during FY12, with total receipts marking a

growth of nearly 18 percent compared to the previous fiscal year. The workers reparation from the four

major destinations: Saudi Arabia, UAE, UK, USA, summed to around $10.4 billion, accounting for nearly

79 percent of the total inflows received during the year. On the growth front, inflow from Saudi Arabia

led the field. The share contributed from these four countries to Pakistans remittance pie has increased

successively over the past five years. With economic red flags rising high in the Western parts of the

world, inflows from several European countries and Canada, already accounting for a razor-thin

contribution in the countrys total remittances pool, fell further during the year. Undoubtedly, the

growth in inflows comes at the heels of initiatives taken by the government to facilitate transfer of funds

through formal channels, while some credit goes to stable economic prospectus in oil-rich countries. A

preliminary study conducted by PIDE has attributed growth in remittances in the last decade to increasein the stock of Pakistani migrants working abroad and changes in their skill composition, while validating

the role of Pakistan Remittances Initiative (PRI) in diverting inflows from the informal to formal channel.

Moreover, the study also highlighted other possible drawing cards playing a whip hand in lubricating

inflows such as whitening of black money, transfer of undeclared export earnings and receipts from

sales of assets abroad. With remittances in the running, as the country realised an average annual

growth 21 percent during the past ten years, remittances will continue to aid in containing the current

account deficit. Inflows in developing countries are forecasted to grow at 7-8 percent annually to reach


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$467 billion by 2014, according to World Banks estimates. But, a dangerous cocktail of slowing global

economic growth and growing restrictions on foreign workers in the Middle East suggest that taking

solace in remittances might put the country through the wringer.

DawnWednesday July 11, 2012Remittances set new record

KARACHI, July 10: Overseas Pakistanis sent record $13 billion remittances during the

just ended fiscal year, said the State Bank on Tuesday.

The overseas workers remitted a record amount of $13.186 billion, showing growth of 17.73 percent compared with $ 11.200 billion received during the preceding fiscal year (2010-11).

Except for September and November when $890.42 million and $924.92 million respectivelywere received, Pakistani workers remitted more than $1 billion during 10 months of the fiscalyear.

The State Bank said that remittances received from all the countries showed substantial growthduring the last fiscal year and almost all of this growth was through banking channels.

The monthly average remittances for July-June 2012 period were $1.098 billion as comparedwith $933.41 million during the preceding fiscal year, registering an increase of 17.73 per cent.

In June, Pakistanis sent home $1.117 billion as compared to $1.104 billion received in the samemonth of 2010-11.

The record remittances of $13.2 billion have substantially defused impact of current accountdeficit which may be around or above $4 billion for the current fiscal year.

However, the trade gap which could be over $20 billion is far more than the remittance received

by the country.

The huge trade deficit was the real reason for current account deficit which could be a threat toeconomy facing depleting foreign exchange reserves.


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Business RecorderWednesday June 13, 2012

Remittances standing tall

Largely impervious to global uncertainties, hard-earned money sent home by overseas Pakistani

summed to a sizeable Rs.12 billion during the first eleven months of the current fiscal year, glided 20

percent higher compared to the same period of last year. Workers remittance from Saudi Arabia is

leading the field, accounting for a quarter of the total inflows. However, workers reparation from the

four major destinations: Saudi Arabia, UAE, USA and UK alone accounted for around 80 percent of the

total remittances received since the start of the current fiscal year. Thanks to overseas Pakistani, the

country managed to rank as the sixth largest recipient of remittances in 2011. Behind the radical growth

are stable economic prospects in oil-rich Middle Eastern countries, along with initiatives taken by the

government to facilitate transfer of funds through formal channels. In part, intellectuals held the

incentive to turn black money into white money responsible for the portion of growth in inflows. Decline

in interest rates also failed to upend inflows, negating the market perception that higher interest rates

were inducing stream of remittances from abroad. Besides, there is an unequivocal disconnection

between rupee-dollar parity and the remittance inflows in the past, thus, suggesting inflows to remain

resilient down the road in the face of recent slide in rupee against dollar. The inflow pattern chimes with

that of other developing countries. According to the World Banks estimate, remittance flows to

developing countries are estimated to have reached $372 billion in 2011, a jump of 12.1 percent over

2010. However, remittance inflows to South Asian region alone registered a growth of 18 percent in

2011- the highest growth rate among other regions. The multilateral agency forecasted inflows indeveloping countries to grow at 7-8 percent annually to reach $467 billion by 2014. If history is any

guide, given that remittance inflows realised an average annual growth rate of 30 percent during the

past ten years, inflows send home by overseas Pakistani should continue to make headway. It has been

estimated that the country can fetch around $20 billion in annual inflows if all funds are routed through

formal channels. All of this is a sign of progress, but there are a slew of downside risks to this paved

outlook. A combination of economic upheaval across developed countries, tougher immigration rules

and vague oil outlook might throw a spanner in the works.


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Express TribuneWednesday April 25, 2012

Pakistan to receive $13.5b in remittances

WASHINGTON: Pakistan will receive a record $13.5 billion in foreign remittances a

sign of overseas Pakistanis confidence in the economic policies of the government, which

have now put the national economy on the path to stability and growth, Finance Minister

Dr Abdul Hafeez Shaikh said on Monday.

Wrapping up a weeklong visit to Washington, the finance minister said Islamabads policies areyielding results despite soaring international oil prices and an uncertain global economicsituation. This year, Pakistans economy will grow at 4% of GDP, the best in last five years, hesaid.

Overseas Pakistanis will send $13.5 billion this year, reflecting a 21% increase from last years$11.2 billion, the finance minister said at a press conference. Dr Shaikh attended several WorldBank and International Monetary Fund (IMF) forums during his visit. He met with hiscounterparts from other countries as well as US officials, and said that, during his interactions, hecame away with positive feedback and appreciation for the governments policies.

He recounted a host of positive indicators; including a 6% expansion in exports, which follow a30% surge in exports last year; and a jump of 25% in revenue collection in the nine months fromJuly 2011 to March 2012.

Besides, a check on inflation and the government austerity drive have also helped easepressures on the economy.

At the same time, he said, Pakistan is fulfilling its debt repayment obligations and paying back$1.2 billion to the IMF this year. The World Bank will give an unprecedented $1.8 billiondollars to the country this year, and the International Finance Corporations profile will reach

one billion dollars for projects in energy, agricultural, financial, housing , agricultural storageareas.

Business RecorderTuesday April 17, 2012


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Rising remittances

At a time when the economy of Pakistan is facing a number of tough challenges, homeremittances continue to grow at a fast pace, giving a much-needed support to the foreign sectorof the economy and keeping the risk of external sector default at bay.

According to the latest data released by the State Bank, overseas Pakistanis remitted an amountof dollar 9.735 billion in the first nine months (July, 2011-March, 2012) of the current fiscalyear, showing a very impressive growth of 21.45 percent or dollar 1.719 billion as compared todollar 8.016 billion in the corresponding period of FY11.

A positive feature of this growth was that remittance from almost all the countries recorded increases of

varying degrees during the year.

The inflow of remittances during July-March, 2012 from Saudi Arabia, the UAE, the US, the UK, GCC

countries and the European Union (EU) amounted to dollar 2.66 billion, dollar 2.14 billion, dollar 1.72

billion, dollar 1.13 billion, dollar 1.10 billion and dollar 273.43 million respectively against the inflows of

dollar 1.82 billion, dollar 1.86 billion, dollar 1.49 billion, dollar 879.53 million, dollar 948.12 million and

dollar 255.73 million respectively in July-March, 2011.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries, however,

came down to dollar 710.38 million from dollar 760.42 million in the corresponding period last year.

In the latest month ie in March 2012, dollar 1.142 billion was sent home by overseas Pakistanis, up by8.54 percent, against dollar 1.052 billion received in the same month of 2011.

A sharp increase in home remittances is indeed a very welcome development for the country,

particularly at a time when other components of the external sector account like the trade balance are

worsening, putting a great deal of pressure on the current account of Pakistan.

Also encouraging is the fact that home remittances continue to show a robust growth despite

recessionary tendencies in some of the developed countries like the US and EU countries where

employment opportunities and the earning potential of the expatriates were presumed to be shrinking.

If the present trend continues, the amount sent by overseas Pakistanis may touch dollar 13 billion which

would be a record level during a year.

The jump in home remittances could be attributed to a number of factors but authorities of the country

generally take credit for this growth themselves.

They believe that "Pakistan Remittance Initiative (PRI)," a measure launched jointly by the State Bank,

Ministry of Finance and Ministry of Overseas Pakistanis had been responsible for raising the flow of

remittances through banking channels to the present level.


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However, such an assertion could only be partly true as factors like closing the gap between official and

unofficial rates of exchange and overall uncertainty in some of the Middle Eastern countries could have

also played a role in enhancing the level of remittances.

Although it is hard to find concrete evidence, yet there is also a perception in the market that foreign

funds may also be flowing to the country to finance terrorist activities and whiten tainted money.

If this is true, the facts need to be verified and action taken accordingly to safeguard national interests.

It needs to be stressed, however, that favourable impact of home remittances on the current account,

exchange rate, foreign exchange reserves etc can only be fully realised if other elements of the balance

of payments also show healthy trends or at least do not behave so negatively so as to more than

neutralise the positive impact of home remittances.

Unfortunately, Pakistan is confronted with a situation which is not entirely satisfactory.

During July-March, 2012, the trade deficit of the country has risen to dollar 16.10 billion as against dollar

11.29 billion in the corresponding period of last year, reflecting an increase of 42.57 percent.

More worrying is the fact that exports during the year were down by 3.03 percent and have been falling

consecutively for the last six months.

It is clear that the rise in home remittances, though very impressive, has not been able to fully cover the

trade gap and, as a consequence, the current account deficit of the country has been widening during

the year.

Therefore, while welcoming positive news on home remittances, it was also important for the country's

economic managers to seriously analyse the factors behind the declining trend in exports and ensure

that such a trend is reversed as soon as possible.

Such an effort was necessary because home remittances cannot fully compensate for the negative

impact originating from the trade account.

DawnWednesday April 11, 2012

Remittances reaching close to $10bn

KARACHI, April 10: Remittances sent by overseas Pakistanis reached close to $10 billion

in the first nine months of this fiscal year keeping the hopes alive that the country will not

face default like situation even after end of inflows from the IMF.


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The State Bank reported on Tuesday that overseas Pakistanis remitted $9.735 billion in JulyMarch period, showing a growth of 21.4 per cent or $1.719 billion when compared with $8.016billion remitted in the same period last fiscal year.

Remittances from all countries showed growth during the first nine months of the current fiscal

year, said the SBP.

The monthly average of remittances came out to $1.081 billion for July-March period comparedto $890 million in the corresponding period last year, an increase of 21.45 per cent.

According to the SBP report overseas Pakistanis remitted $1.142 billion in March 2012compared with $1.052 billion in the same period last year, showing an increase of 8.54 per cent.

Almost all of this growth in remittances was through banking channels, said the report.

It said the continued impressive growth in workers remittances was the result of a joint initiative

called Pakistan Remittance Initiative (PRI) launched in April 2009. This initiative has been takento achieve the objective of facilitating and supporting faster, cheaper, convenient and efficientflow of remittances.

DawnTuesday October 11, 2011

Remittances surge 24.6pc in July-Sept

KARACHI: The remittances sent by overseas Pakistanis tumbled 32 per cent in September2011 over the preceding month breaking the flow of ever increasing monthly inflows for the

last three months of this fiscal year.

However, the first quarter`s collective inflow of remittances was 25 per cent higher than thesame period of last year.

The State Bank reported on Monday that remittances rose to $3.297 billion during the firstquarter (July-September) of 2011-12 which was 24.6 per cent higher than previous year`s $2.646billion.

The remittances have become backbone of the economy as the country depends largely on itafter export proceeds.The fall in September remittances was substantially high as it fell by $420 million at $890million against $1.3 billion sent in August, a shortfall of 32 per cent.

The policymakers are highly concerned about falling remittances as the country has lost otheroptions for inflows of foreign exchange in the wake of souring relation with United States asmost of the donor agencies including IMF are reluctant to provide loans.


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On the other hand, the government will have to start paying back the IMF loans from February2012.It seems that the country would have to face tough situation regarding the foreign exchangereserves while its dependence on remittances would largely increase.

The monthly average remittances for the July-September period comes out to $1.099 billion ascompared to $882 million during the same corresponding period of the last fiscal year,registering an increase of 24.60 per cent.

The State Bank said $890 million were remitted by overseas Pakistanis in September, down 3.43per cent when compared with $922 million remitted in the same month last year.

While the bankers reported lower inflows, the currency dealers explained the situation in positiveway by denying any large shortfall in remittances.

Each month we surrender $300 to $400 million in banks which are included in the remittancesbut in September we surrendered only $85 million to banks because most of our dollars werepurchased by intending hajis, said Malik Bostan, Chairman Exchange Companies Associationof Pakistan (ECAP).

The government has asked the intending pilgrims to buy their required dollars from open marketwhich created a shortage and suddenly pushed up the demand causing higher prices of US dollar.

He also said because of Eidul Fitr remittances in August were very high since the overseasPakistanis used to send more money at this occasion. The month of Ramazan also attracts highremittances due to Zakat and charity.

The country had been receiving over $1 billion per month for last three months which ended inSeptember.

Business RecorderSaturday October 29, 2011

Inland remittances transactionsSBP declines permission to ECAP

The State Bank of Pakistan (SBP) has reportedly turned down a request of the ExchangeCompanies Association of Pakistan (ECAP) seeking permission to handle inland remittances

transactions, it is learnt.Sources said that a request was made by the exchange companiesduring a recent meeting in Ministry of Finance that they should be allowed to handle inlandremittance transactions through which a person selling foreign exchange in one city may receivecash transaction in another city.


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The SBP response was that inland/domestic remittances are a banking activity and ECs havebeen established under 'Foreign Exchange Regulation Act 1947', which essentially relates toforeign exchange business, and no other banking activities like inland remittances/transfer ispermissible under the governing statute law.

The SBP said that it has already allowed the ECs to expand their network as per related EC

licensing framework, and new requests in this regard are also being processed accordingly.

The ECAP has demanded level playing field for the exchange companies by paying Saudi riyal25 per home remittance transaction, as is being given to commercial banks.

Responding to the proposal, the SBP stated that ECs may join the scheme by becomingdistribution partners of banks.

The objective of the scheme is to facilitate small remitters to cover their transactions relatedbanking cost to promote formal remittances.

Reimbursement of telegraphic charges is a scheme of the Ministry of Finance introduced in

1985 (long before the establishment of ECs).

It is being reviewed with the objective to rationalise it, even for the banks, from transactionbased approach to volume based approach.

The rationale behind the establishment of exchange companies is to cater for the foreignexchange needs of the individuals according to the related regulatory regime.

So far as to commercial/trade related transactions are concerned, they are beyond the scope ofthe Ecs' permissible activities.

In terms of Section 2 of the Presidential Ordinance of 2002 whereby through an amendment in

FERA 1947 exchange companies were allowed to be established in Pakistan, defines"exchange company as a company authorised to deal in foreign currency notes, coins, postalnotes, money orders, bank drafts, travellers cheques and transfers".

Therefore, the ECs' demand seeking permission for commercial/trade transaction is beyondtheir mandate.

The NationTuesday November 01, 2011

Remittances increased due to PRI, claims govt

ISLAMABAD - Secretary Finance Dr Waqar Masood Khan Monday said that foreign remittanceshad increased due to the governments plan Pakistan Remittances Initiative that provided anopportunity to the Pakistanis living abroad to send their money through regular channel.


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Talking to The Nation, Dr Waqar said that the government had worked for

Remittances Press Material

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Transcript of Remittances Press Material