In the ongoing low economic waves, it is only the remittances that have kept the country’s reserves afloat. The incumbent government often takes credit for increasing inflows from overseas Pakistanis which have hit a record $10.6 billion from July 2021 to October 2021. An upbeat State Bank of Pakistan celebrated the figures with a tweet: “At $2.5bn in October 2021, remittances continue their strong streak, rising by 10pc from Oct 2020 and only moderating marginally compared to September 2021. Cumulatively, they have risen to $10.6bn so far in FY22, up 12% over the same period last year”. No doubt, the prime minister has a strong appeal among the overseas Pakistanis, who have taken it as a mission to increase inflows, so as to get the most of the highest exchange rates as well. The dollar has hit an all-time high of Rs176 against the local currency and the trend is going upward unchallenged. If remittances have increased thanks to the attractive exchange rate, the country’s expensive imports have broken the bones of the lower middle and poor classes.
The government needs to control the exchange rate, and that is possible when imports are curtailed. Most of the import bills are being swallowed by food items. The food crisis, stemming from the low crops of wheat and sugarcane, forced the government to go to the international market to buy staple food to meet the local demands. But that is a temporary phenomenon as a single bumper crop of wheat and sugarcane would stabilize the food reserves. The poor prospects of foreign reserves, however, would remain there. Pakistan cannot solely be run on remittances no matter whether remittances have posed a 12.5 percent growth in the corresponding period. The central bank says the remittance figures have hit the ceiling of $2.5 billion for eight straight months.
The remittance figures are fine but the government cannot rely on this single source. Foreign direct investment should see a surge. Moreover, more sectors should be groomed to keep the economy afloat. The government had started work on increasing exports and the revival of tourism. Though exports have shown a good take off, tourism has yet to revisit its beaten and lost path. Meanwhile, the government must continue its proactive policies and incentives for exporters, expatriates, and investors to improve the economy.
