Foreign remittances can be increased if the government controls the illegal ways of sending the money from abroad to Pakistan. About 80 percent of foreign remittances through black market which is commonly known as Hundi and hawala are sent to the country.
According to a report of the World Bank, about $624 billion are remitted every year. Apart of that, another 80 percent are sent through illegal ways. The main reason for remitting the amount through illegal channels is the big gap between the open market and inter-bank rates.
The open market rates are big attraction for the overseas Pakistanis as inter-bank rates are much less than the rates, they get in open market. In the fiscal year 2021-22, Pakistan received $31.2 billion in the remittances.
The financial experts of the country are of the opinion that this amount can go high easily as around 10 million Pakistanis are living in different countries and about 65 percent of them send money to their homeland on regular basis.
It is believed that many overseas Pakistanis have stopped sending the money to Pakistan, especially for investment purpose and are waiting for the suitable time when the countrys economic and political condition is streamlined.
ACE Money Transfer Executive Head of Finance, Naqqash Hafiz told the media, Six months ago, an expat used to send between $400 and $450; the average has now dropped to $325-350.
The receiver in Pakistan was still getting the same amount of money due to a sharp increase in the dollar rates.
The big gap between open market rates and inter-bank rates is causing the drop of foreign remittances in government treasury. Naqqas said, A couple of months ago when the gap between the two markets was only around Re. 1, we recorded a 25 percent increase in our business. We also observed that on average an expat sent $100 extra.