A study carried out at the Pakistan Institute of Development Economics (PIDE), by Dr. Rashid Amjad, Dr GM Arif and Dr M. Irfan has analysed the ten-fold increase in remittances between 2001 and 2012 and reached to the conclusions that the manifold increase in recorded remittances in the last decade can be explained to a large extent by the increase in the stock of Pakistani migrants working abroad, which increased from less than 4 million in 2004 to about 7 million in 2012. Changes in their skill composition, becoming more skilled and better paid, also contributed to this increase. However, this explanation is critically dependent on the assumptions regarding remittances sent through formal and informal channels.
The study reveals that the major part of the recorded remittances cover not just remittances from Pakistani workers abroad but in fact cover all remittances sent by the Pakistani diaspora, many of whom have acquired nationality of their resident country. The study suggests that the Pakistan Remittances Initiative (PRI), jointly started by the State Bank and the Ministry of Finance, has played an important role in diverting remittances from the informal to formal channels. In this effort they have received sterling support from the major commercial banks.
The study believes that the untapped remittances of over $10 billion per annum, can be diverted into formal channels. This requires continued efforts by the State Bank of Pakistan and the Commercial Banks. The major commercial banks have a grievance that their efforts which have yielded very positive results are being hampered by changes in policy and/or non-payment of incentives offered to banks to transfer remittances. By doing so confidence of banks abroad that transfer such money is seriously impaired.
The study concludes that there is a need to examine current procedures, and rules and regulations in countries, which encourage transfers through informal channels as well as transfer of such resources into foreign accounts.
Some commercial banks were also of the view that Pakistanis should be allowed to open foreign accounts abroad.
This would encourage them to deposit money in Pakistani banks abroad rather than foreign banks.