Pakistan is a cash strapped and poverty ridden country. It has plunged into the quagmire of slow economic growth, current account deficit, unemployment, inflation, exchange rate instability and giant burden of debt. Multiple factors are responsible for the fragile economy of Pakistan. Among them, one of the major factor is less inflow of dollars and it is the result of greater outflow of dollars in the form of imports and repayment of debt.
In the mode of darkness, foreign remittances inflow acts as a ray of light. Foreign remittances inflow is the biggest source of dollars for Pakistan, and assists it in bridging up current account deficit. It also plays a significant role in the exchange rate stability as well as mitigating poverty in Pakistan. It accelerates economic growth and boost investment in the country. It plays vital role in improving living standard of the people of Pakistan. In previous fiscal year, inflow of foreign remittances was recorded at $ 32 billion but in current fiscal year a massive diminution has been seen in it. During incumbent fiscal year, Pakistan has received foreign remittances of worth 20.5 billion US $ till the month of April while till the same month of previous fiscal year, Pakistan had received 23bn$. Numerous factors such as gap between inter and open market exchange rate, negative role of grey market, worldwide inflation, high transaction costs and taxes on the amount of remittances send by remitters have contributed in driving down the inflow of remittances in Pakistan.
The daunting situation of dwindling foreign remittances inflow is worsening Pakistan’s economic issues. Pakistan’s neighbour country India has received highest amount of foreign remittances of worth 100bn$ in 2022.There are multiple precedents of countries like Nepal, Bangladesh, India etc which are developing countries like Pakistan but are productively utilizing foreign remittances for boosting economic growth and for coming out of the morass of poverty. Foreign remittance is a development metric and has ability to convert and make a county from zero to hero. There is a dire need of enhancing inflow of foreign remittances in Pakistan. Government of Pakistan should take some stern and pragmatic actions for eradicating the bottlenecks in the way of the inflow of foreign remittances in Pakistan. For this purpose, government should bridge up the gap between inter and open market exchange rate, the negative role of grey market should be completely eradicated.
For encouraging remittances inflow in Pakistan, government should give special status to those remitters who send bulk amount of remittances in the country, they should be treated like VIPS. Government should also designate some schools, roads and buildings etc in the name of these remitters especially in the local regions of the remitters. It will ramp up the spirit of remitters. Government should identify the remitters who have lion’s share in Pakistan remittances and grant them with special awards on the national days of Pakistan. Transaction cost and prolong time period in sending remittances through formal channels should be mitigated. Remitters should be given representation in the parliament of Pakistan as given in the legislative assembly of AJK. It will encourage remitters and make them feel as stakeholders.
Remitters should also be given monetary incentives like opportunities to win plot, house, shares in stock market, scholarships of their children, free medical facilities etc. on the basis of the average amount of remittances send by them in one or two years. Further, Government should launch some special schemes for remitters such as high return saving certificates, investment opportunities in SEZ, roads, highways construction for the productive utilization of remittances instead of just using remittances by remitter’s families for consumptive and life style improving practices. Pakistan can get rid of the problems of poverty, unemployment and current account deficit etc to some extent, if inflow of foreign remittances is surged and its productive utilization is encouraged and adopted in Pakistan, in the upcoming years. Remitters are the lifeline of our foreign exchange reserves. In prevailing economic crunch, government should take these measures for boosting the inflow of foreign remittances in Pakistan. Foreign remittances act as a lifesaving jacket for Pakistan because it protects Pakistan from sinking into the sea of slow economic growth, dwindling foreign exchange reserves and economic devastation.