During the last few decades, a lot of countries have become quite dependent on the flow of home remittances for their balance of payments needs and raising the standards of living of ordinary people. According to a report prepared by the International Fund for Agricultural Development (IFAD), about 200 million migrants, half of whom are women, sent back dollar 445 billion to their families in Asia, Latin America and Africa in 2016. The total amount of remittances has risen by more than 50 percent in the past decade and is used to lift families out of poverty by providing financial stability, access to education, housing and healthcare. Most remittances (dollar 117 billion) came from the US, followed by Europe (dollar 115 billion) and the Gulf states (dollar 100 billion). Total migrant worker earnings are estimated to be dollar 3 trillion annually, out of which about 85 percent is used in the host countries and the amount of money migrants send home averages less than one percent of host countries' GDP. The report states further that families back home receive an average of dollar 200 a month, which makes up 60 percent of their household income. Pedro De Vasconcelos, IFAD policy advisor and author of the report said that "it is truly a global phenomenon on which people, due to lack of opportunities, have to leave their families behind to provide for them. Migration should be an option, a choice. But for 200 million people, it is a necessity."

The above statistics on global home remittances do not only quantify the magnitude of home remittances but speak about their importance and contribution in recipient countries. The aggregate flow of home remittances is not a small amount and is more than 50 percent of Pakistan's GDP. As expected, major part of home remittances flows from the US, Europe and Gulf countries. Ordinary people from all over the world are mostly interested in migrating to the developed countries due to prosperity in these regions, a higher demand for professionals and their low birth rates while Gulf states need labour for building infrastructure after the oil boom. The reliance of developing and underdeveloped countries on remittances is largely a symptom of poverty that pushes people to find economic opportunities abroad. The estimate of IFAD that home remittances constitute 60 percent of the household income in the recipient countries shows the extent of dependence of the ordinary or poorer families on home remittances. The living conditions of these families could be well imagined if this source of income dries up.

The phenomenon of home remittances is definitely highly important for Pakistan. At present, it is the major source of containing balance of payment challenge. Total flow of remittances is almost equal to the export earnings of the country and constitutes nearly 7 percent of the country's GNP. Their stoppage or even a significant reduction in a particular period could cause a devastating impact on the country's GNP and its balance of payment position. The impact on the recipient families could be far worse. Using the steady flow of remittances, poorer or ordinary families buy food, get housing, send their children to school, access healthcare, or even invest in businesses and have some savings. We don't know how these families are going to cope or react if this source of income is no more there. The governments in Pakistan have also to compromise sometimes on their foreign policy because of the heavy dependence of the country and its people on the flow of home remittances. Keeping all these factors in view, while the government somehow needs to reduce its dependence on the flow of home remittances, recipient families need to use the amount of remittances more productively in order to reduce poverty and prevent more people from migrating in the first place. At present, most of the amount of home remittances is frittered away on consumption by the families back home, which is unfortunate.

Copyright Business Recorder, 2017