HOME remittances plunged by a whopping 20pc year on year to $1.33 billion in July 2016. If this trend persists in the following months then Pakistan may face balance of payment problem in future.
The State Bank of Pakistan has attributed this huge drop in home remittances to Gulf economies which are slowing down owing to reduction in crude oil price and thus resultingin thousands ofjoblosses of expatriates, including Pakistanis.
I believe this is not the only reason for the 20pc drop because crude oil prices more than halved from their peak since the year 2014 are still in the range of $40 to $50 a barrel. But we did not have such a big decrease in home remittances during the last two years.
Home remittances from the United States and the United Kingdom for the month of July 2016 also fell 33.5pc and 38pc year on year.
These economies are not dependent on oil.
Then why have our home remittances from these two countries fallen by large percentages? The SBP and the country`s economic managers should dig deep into this important data and find out the reason for a drop of 20pc year on year in home remittances and inform the nation about their findings.
I believe there is a clear and strong link between home remittances and real estate business in Pakistan. This big plunge inhome remittance has been caused by the recent abruptclosure ofrealestate business during June and July owing to the huge increasein taxesonpurchase/sale ofurban property announced in 2016-17 budget.
