How exchange companies take on Pakistan economy?

• Author: Shaikh, Nazir Ahmed
• Position: Report

Byline: Nazir Ahmed Shaikh

Remittances plays a crucial role in Pakistan's economy. According to World Bank's report the projected Pakistan's remittances growth to remain moderate at 6.2% due to significant reductions in inflows from Saudi Arabia and Gulf States.

The country was ranked 7th amongst the top ten recipients of remittances globally in 2018 receiving $20.9 billion and with India ranked at 1st with $79.5 billion. The much needed inflow of dollars are like blood lifeline for Pakistan as it boosts foreign exchange reserves.

Pakistan received overall remittances of $19.3 billion in fiscal year ended on June 30, 2017, down 3% compared with $19.91 billion in fiscal year 2015-16. These remittances make up almost half the import bill and cover the deficit in the trade of goods account. The State Bank of Pakistan has been trying to devise ways to increase home remittances. The widening of current account deficit over the past one year-and-a-half has underlined the need to enhance the flow of remittances from abroad. With a view to promoting home remittances through legal channels, the State Bank has launched "Asaan Remittance Account" scheme for prospective beneficiaries of home remittances. It is believed that this move will facilitate opening of bank accounts by low-risk customers to receive home remittances through proper accounts instead of resorting to traditional cash over the counter transactions.

This initiative has been launched in collaboration with Pakistan Remittance Initiative (PRI) to promote the use of bank accounts by home remittance recipients. Individuals can open these accounts with a simple, one-page account opening form, which is both paper-based and electronic, requiring only basic customer information. Some time back Pakistan had launched the Pakistan Remittance Initiative (PRI) to enhance the flow of remittances and the scheme produced positive results. But of late, the PRI seems to have lost its effectiveness. In view of this, the latest initiative of Asaan Remittance Account has been started.

Foreign Exchange Policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of the Foreign Exchange Regulation Act, 1947. The objective of the Act is to regulate, in the economic and financial interest of Pakistan, certain payments, dealings in foreign exchange, securities, import/export of currency and bullion. Under this Act, the basic regulations are issued by the Government of...