Low remittances

Home remittances plunged by a whopping 20 percent year on year to $1.33 billion in July 2016. If this trend persists in the following months Pakistan may face balance of payment problem in the future. The State Bank of Pakistan has attributed this huge drop in home remittances to the Gulf economies which are slowing down due to reduction in crude oil price and thus resulting into thousands of job losses of expatriates including Pakistanis. I believe this is not the only reason for the 20 percent drop in our home remittances for the month of July 2016.

It is noteworthy that home remittances from the US and the UK for the month of July 2016 fell 33.5 percent and 38 percent year on year. The American and British economies are not dependent entirely on the revenue from high crude oil prices. So why have our home remittances from these two countries also fallen by large percentages? The SBP and the country’s economic managers should dig deep into this important data of and find out the reason for such a big drop. I believe that there is a clear and strong link between home remittances and the real-estate business in Pakistan. It is a dream of all Pakistanis to have his/her own house and in order realise this dream a lot of overseas Pakistanis have been sending home remittances and investing in urban properties since 1970s. I have a very strong feeling that this big plunge in home remittances has been caused by the recent abrupt closure of real-estate business during the month of June and July 2016 due to the huge increase in taxes on purchase/sale of urban property.

Ejaz Ahmad Magoon

Lahore