Pakistan’s economy has long been dependent on two sources: remittances from its diaspora working in the Gulf and in the West and loans from friendly states and international financial institutions (World Bank and IMF). The first among these, remittances, bring in an annual $15-20 billion for the beleaguered economy.
In April 2020, the World Bank in its issue “Migration and Development” had noted that “remittances to Pakistan in 2020 are projected to decline by 23 per cent, totaling about $17 billion, compared with $22.5bn remitted in 2019, in the wake of the economic crisis caused by the Covid-19 outbreak.”
Covid19 and the resulting oil prices crisis has led to a twofold problem for Pakistan. Not only is Pakistan going to receive fewer remittances but “it has to devise a strategy to accommodate the returning Pakistani workforce from overseas in the domestic job market.”
As an Editorial in Daily Times noted, “No matter how expected a slump in remittances was, news items confirming such fears still make for some worrying reading. That is because knowing about and understanding a problems does not always mean that it can be solved easily. Now, just as the economy is contracting for the first time in many decades – anywhere between negative 0.5 and two per cent, depending on whose analysis you are reading – the time has also come for remittances to begin falling short of the usual number. Financial trauma in the US as well as the Gulf countries, where most expatriate Pakistanis live and work, is now having a very pronounced knock on effect on the Pakistani economy for very obvious reasons.”