Remittance resurgence a tonic but no cure for sickly emerging economies like Pakistan 

In this picture taken on April 15, 2019, a Pakistani dealer counts US dollars at a currency exchange shop in Karachi. (AFP)
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Updated 22 December 2020
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Remittance resurgence a tonic but no cure for sickly emerging economies like Pakistan 

  • Pakistan, Mexico, El Salvador, Kenya, Bangladesh, Philippines and Sri Lanka are among those enjoying resurgent flows in recent months
  • Record flows to Pakistan have helped it accumulate a $1.2 billion current account surplus, experts say such flows may falter in 2021

LONDON: Larger-than-expected money transfers from migrants overseas have provided a tonic for several sickly economies like Pakistan during the coronavirus crisis, but the outlook for such flows remains fraught with uncertainty even as vaccines are rolled out.
Pakistan, Mexico, El Salvador, Kenya, Bangladesh, Philippines and Sri Lanka are among those enjoying resurgent flows in recent months, helping them narrow current account gaps, stabilize currencies and meet any overseas debt payments.
Such countries have led a surprise recovery in remittances in the second half of 2020, as the slowdown in flows amid the pandemic proved less severe than initially feared.
Migrants have cushioned the pandemic’s economic blow, drawing down savings to help out families back home and sending more money via official channels rather than in person, while benefiting from access to state support, including cash handouts, in host countries such as the United States.
While vaccinations should help economic activity to return to normal, the risk of mounting job losses as government support unwinds mean such flows, a source of FX revenue and gross domestic product for many emerging countries, may falter in 2021.
Unemployment in wealthy G20 countries, home to a sizeable proportion of migrants, is expected to reach 10% by the end of 2020 and remain above levels at the end of 2019 next year, the OECD has forecast.
“Countries like Pakistan, Bangladesh and Philippines, which receive about 9% or 10% of GDP from remittances, have a window of opportunity to invest these flows into productive areas of the economy to help their recoveries because at some point this window may close as people may lose their jobs or decide to go back to their home countries,” said Emre Akcakmak, portfolio manager at East Capital, a specialist in emerging and frontier markets.
Record flows to Pakistan have helped it accumulate a $1.2 billion current account surplus at a time when it is paying back a $3 billion loan to Saudi Arabia.
Strong remittances and subdued imports should help Sri Lanka to service its July Eurobond maturity, said Tellimer economist Patrick Curran. Beset with surging debt and collapsing tourism revenues, the island nation has been assessed at growing risk of default by rating agencies.
Mexico’s currency depreciation has helped put the country on course for its largest current account surplus in more than 30 years, Goldman Sachs estimates.

DEEPER, PROLONGED
Remittances are relatively stable compared with other financial flows. That includes foreign direct investment, which remittances overtook in 2019. Meanwhile portfolio flows, set to surge in the last quarter of 2020 to their highest since the first quarter of 2013, are prone to sharp reversals as they did during the taper tantrum.
But the outlook is uncertain.
The World Bank in October revised its 2020 estimated drop in flows to low- and middle-income countries to 7% from 19.7% previously, but predicted a further 7.5% dip next year. That is a deeper and longer downturn than during the global financial crisis, when flows shrank 4.9% in 2009, before rebounding 11.8% a year later.

For the first time in recent history, the stock of international migrants is expected to fall in 2020. Those remaining in host countries face an uncertain future.
In the United States, in a reversal of pre-pandemic trends, the unemployment rate for immigrants was now 2 percentage points higher than the rate for natives, according to the OECD.
“We are expecting a strong recovery in global growth as vaccination is rolled out and we begin to see a normalization in economic activity. This should support global remittances,” said Farouk Soussa, senior economist at Goldman Sachs.
“On the other hand, we think there have been a number of one-off factors that have held up remittances this year, and these may not come into play next year.”
The Gulf, accounting for around 40% of total outward remittances, may see a push to replace foreign workers with locals in 2021, Soussa said.
That is bad news for countries that rely on transfers from the Gulf, such as Bangladesh, Philippines, Egypt and Lebanon. Lebanon’s financial crisis and dwindling economy mean remittances are seen rising to more than a third of GDP in 2020.
One hope is a recovery in exports and tourism, the other big money maker and hard currency source for emerging economies. Yet while the vaccine rollout should help, the outlook is uncertain.


Pakistani PM to address closing plenary of WEF special meeting, meet Saudi ministers today

Updated 8 sec ago
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Pakistani PM to address closing plenary of WEF special meeting, meet Saudi ministers today

  • Shehbaz Sharif met Saudi crown prince Mohammed bin Salman on Sunday and discussed bilateral ties and war in Gaza
  • WEF has convened Special Meeting on Global Collaboration, Growth and Energy for Development in Riyadh 

ISLAMABAD: Pakistani Prime Minister Shehbaz Sharif will address today, Monday, the closing plenary of a special meeting of the World Economic Forum being held in Riyadh and meet a number of top Saudi officials, state-run APP news agency said.

Sharif arrived in Riyadh on Saturday for the World Economic Forum’s Special Meeting on Global Collaboration, Growth and Energy for Development on April 28-29. The conference has convened more than 700 participants, including key stakeholders from governments and international organizations, business leaders from the World Economic Forum’s partner companies, as well as Young Global Leaders, experts and innovators.

“Sharif is scheduled to address the closing plenary of the Special Meeting of the World Economic Forum titled ‘Rejuvenating Growth,’ on the third day of his visit to the Kingdom,” APP said. 

“The third-day agenda of the prime minister’s visit also consists of his meetings with Saudi ministers for trade, energy, environment and agriculture. He is also likely to meet with the Malaysian counterpart.”

On Sunday, Sharif attended a Special Dialogue and Gala Dinner hosted by Saudi crown prince Mohammed bin Salman where they discussed bilateral ties as well as regional issues including the war in Gaza.

Sharif’s meeting with the crown prince took place less than a week after a high-powered delegation, headed by Saudi Foreign Minister Minister Faisal bin Farhan, visited Pakistan to discuss investments. 

“To continue the discussion, the Prime Minister said that he has brought with him a high-powered delegation to Riyadh, including key ministers responsible for investment, so that follow-up meetings could take place between relevant officials,” the Pakistani Prime Minister’s Office said. 

Sharif reiterated his invitation to the Saudi crown prince for an official visit to Pakistan at his earliest convenience, the PMO added. 

Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to over 2.7 million Pakistani expatriates and serves as the top source of remittances to the cash-strapped South Asian country.

Both Pakistan and Saudi Arabia have been closely working to increase bilateral trade and investment deals, and the Kingdom recently reaffirmed its commitment to expedite an investment package worth $5 billion.

Separately, Sharif met Bill & Melinda Gates Foundation (BMGF) co-chair Bill Gates on the sidelines of the WEF meeting on Monday, the PMO said, and discussed efforts to eradicate polio in Pakistan, one of two countries globally where the virus is still endemic. The two leaders also discussed progress on ongoing activities between Pakistan and the BMGF in immunization, nutrition, and financial inclusion, the PMO said. 


Police recover judge kidnapped last week in Pakistan’s restive northwest

Updated 15 min 29 sec ago
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Police recover judge kidnapped last week in Pakistan’s restive northwest

  • Unidentified armed men kidnapped Shakirullah Marwat near Bagwal town in Khyber Pakhtunkhwa province on Saturday
  • Police official says Marwat was recovered after police and security forces conducted joint operations in Tank, Dera Ismail Khan districts

PESHAWAR: A district and sessions judge who was kidnapped by unidentified gunmen from Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province on Saturday has been recovered, a senior police official and a relative of the judge both confirmed on Monday.

Unidentified gunmen abducted Shakirullah Marwat near the dusty town of Bagwal on Saturday while he was traveling from his hometown city of Tank toward the Dera Ismail Khan district in KP. The incident alarmed Pakistan’s legal community and coincides with a resurgence of militant violence in KP and Pakistan’s southwestern Balochistan province, following the Pakistani Taliban or Tehreek-e-Taliban Pakistan’s (TTP) termination of a fragile truce with Islamabad in Nov. 2022.

Security forces and police conducted two separate operations in Tank and Dera Ismail Khan districts “soon” after Marwat was abducted and killed six militants in the exchange, Regional Police Officer (RPO) Nasir Hussain Satti said. 

“Police and security forces were jolted into action the moment the judge was picked up,” Satti told Arab News. “The forces choked all entry and exit points of the two restive districts, leaving no room for kidnappers to keep the judge with them. Finally, they had to set him free,” he added.

Satti said the judge had been recovered without paying ransom money. “Absolutely not, the judge was recovered without paying any ransom or making any deal with the abductors,” he said. 

Farooq Khan, Marwat’s relative who is also a lawyer, confirmed the judge reached home safely on Sunday night. 

“Thank God Shakirullah has reached home safely,” he told Arab News. 

In a brief video message that was released on Sunday, the judge said he was kidnapped by the Pakistani Taliban and that his release was impossible if his kidnappers’ demands were not met. He was speaking from an undisclosed location and it wasn’t clear whether he was talking under duress. 

“I request the federal and provincial governments, the honorable chief justice of Peshawar High Court, the government of Khyber Pakhtunkhwa, the government of Pakistan and the chief justice of the Supreme Court of Pakistan to accept their (Taliban) demands and ensure my release,” Marwat had said.

Shah Fahad Ansari, a high court advocate and divisional president for the Peoples Lawyers’ Forum, said the legal fraternity appreciated the swift response by police and security forces to ensure the judge’s safe recovery.

“But we demand the authorities adopt all measures to ensure security in the province and discourage recurrence of these kinds of incidents in the future,” Ansari said.

Earlier this month, an attack in Dera Ismail Khan resulted in the death of six people, including five customs department officials, with another person wounded when gunmen targeted their vehicle.

The recent weeks have also seen attacks on police officials in KP.

Earlier this month, a policeman was shot dead in North Waziristan. In related incidents, an official from the provincial counterterrorism department and a senior cleric affiliated with the Jamiat-e-Ulema-e-Islam religious party were fatally shot in target killings in the area.

While no group has claimed responsibility for these attacks, suspicion has fallen on the TTP, whose leadership is said to be based in neighboring Afghanistan.


Pakistan benchmark share index extends rally, breaches 73,000

Updated 31 min 58 sec ago
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Pakistan benchmark share index extends rally, breaches 73,000

  • Pakistan’s benchmark index has surged 75.4% over past year, is up 12.5% year-to-date
  • South Asian country’s central bank will announce a policy rate decision later in the day

KARACHI: Pakistan’s benchmark share index breached the key level of 73,000 to trade at a record high of 73,300 in early trade on Monday, according to data from the Pakistan Stock Exchange website.

The index has surged 75.4 percent over the past year and is up 12.5% year-to-date.

The Central Bank’s monetary policy will announce a policy rate decision later in the day, and the International Monetary Fund’s executive board will meet on Monday to decide on releasing the final tranche of $1.1 million to the cash-strapped nation.
 


Pakistan begins week-long campaign to vaccinate 24 million children against polio

Updated 29 April 2024
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Pakistan begins week-long campaign to vaccinate 24 million children against polio

  • Campaign is being held in 91 districts of Sindh, Punjab, Khyber Pakhtunkhwa, Balochistan and Islamabad
  • Pakistani polio vaccinators and security teams guarding them have often been attacked by militant groups 

ISLAMABAD: Pakistani authorities kicked off a week-long campaign to vaccinate 24 million children against poliovirus in 91 selected districts on Monday, the state-run Radio Pakistan reported, as Islamabad tries to eliminate the potentially fatal disease from the country. 

Pakistan and Afghanistan are the only two countries in the world where the poliovirus, which causes paralysis and can be a life-threatening disease, is endemic.

“The campaign is being held in ten districts of Punjab, 24 districts of Sindh, 26 districts of Khyber Pakhtunkhwa (KP), 30 districts of Balochistan, and the federal capital Islamabad,” Radio Pakistan said, adding that 24 million children under the age of five would be administered the vaccine in these districts. 

Dr. Malik Mukhtar Ahmed Bharath, coordinator to the prime minister on National Health Services, said the government is committed to ensuring that all children are protected from poliovirus. 

“Poliovirus has been detected in multiple sewage samples in the country in recent months which means this virus remains a serious threat to children’s wellbeing,” Dr. Bharat was quoted as saying by the state-run Associated Press of Pakistan (APP) on Sunday. 

He said the only way to protect children from the disease is to vaccinate them against it. “We are sending polio teams to your homes, so make sure to open your door to vaccinators and get your child vaccinated,” he added. 

Dr. Shahzad Baig, coordinator of the National Emergency Operations Center for Polio Eradication described it as a “critical campaign” being held in districts with a high risk of poliovirus spread. 

“We have detected the virus in over 31 districts this year, which is why we are continuing to implement regular vaccination campaigns in all high-risk districts to ensure that children have the immunity to fight off polio infection,” he said. 

Pakistan’s efforts to contain polio have often been met with opposition, especially in the country’s northwestern KP province, where militants have carried out attacks against vaccinators and the security teams guarding them. 

Many believe in the conspiracy theory that polio vaccines are part of a plot by Western outsiders to sterilize Pakistan’s population.

Pakistani masses’ doubts regarding polio campaigns were exacerbated in 2011 when the US Central Intelligence Agency set up a fake hepatitis vaccination program to gather intelligence on former Al-Qaeda chief Osama bin Laden. 


Afghans who made Pakistan home to escape war now hide from deportation

Updated 29 April 2024
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Afghans who made Pakistan home to escape war now hide from deportation

  • Pakistan has forcibly deported some 600,000 undocumented Afghans since October 2023
  • Afghans in hiding find it difficult to earn money, rent accommodation or get medical help

KARACHI, Pakistan: Born and raised in Pakistan to parents who fled neighboring Afghanistan half a century ago, an 18-year-old found himself at the mercy of police in Karachi who took his cash, phone and motorbike, and sent him to a deportation center.

Scared and bewildered, he spent three days there before he was sent back to Afghanistan, a place he has never been to, with nothing but clothes on his back.

The youth is one of at least 1.7 million Afghans who made Pakistan their home as their country sank deeper into decades of war. But they’ve been living there without legal permission, and are now the target of a harsh crackdown on migrants who Pakistan says must leave.

Some 600,000 Afghans have returned home since last October, when the crackdown began, meaning at least a million remain in Pakistan in hiding. They’ve retreated from public view, abandoning their jobs and rarely leaving their neighborhoods out of fear they could be next for deportation.

It’s harder for them to earn money, rent accommodation, buy food or get medical help because they run the risk of getting caught by police or being reported to authorities by Pakistanis.

The youth, who had been working as a mechanic in an auto shop since he was 15, spoke on condition of anonymity for fear of arrest and deportation.

He has applied for the same documentation that his family has, but he won’t get it. Pakistan isn’t issuing paperwork for Afghan refugees or their children.

“My life is here. I have no friends or family in Afghanistan, nothing,” the young man told The Associated Press. “I wanted to come back (to Pakistan) sooner, but things had to calm down first,” he said, referring to the anti-migrant raids sweeping the country at the time.

 A police officer checks the document of a resident during a search operation against illegal immigrants at a neighborhood of Karachi, Pakistan, on November 3, 2023. (AP)

Taliban authorities gave him 2,500 afghanis ($34) once he entered Afghanistan to start a new life. They dispatched him to northeastern Takhar province, where he slept in mosques and religious schools because he knew nobody to stay with. He passed his time playing cricket and football, and borrowed other people’s phones to call his family.

Six weeks later, he traveled from Takhar to the Afghan capital, Kabul, then to eastern Nangarhar province. He walked for hours in the dark before meeting up with human smugglers hired by his brother in Pakistan. Their job was to get him to Peshawar, the capital of Pakistan’s northwest Khyber Pakhtunkhwa province, for the price of $70.

He is relieved to be reunited with his family. But he is vulnerable.

Police have daubed numbers on homes in his neighborhood to show how many people live there and how many have documentation. Hundreds of Afghan families have fled the area since the operation began. There are fewer people to hide among.

Such neighborhoods in Karachi are easily home to tens of thousands of Afghans. But they have no drainage systems, health care or education facilities. There are few women on the streets, and those who venture out wear burqas, often the blue ones more commonly seen in Afghanistan.

Lawyer Moniza Kakar, who works extensively with the Afghan community in Karachi, said there are generations of families with no paperwork. Without it, they can’t access basic services like schools or hospitals.

Afghans were already under the radar before the crackdown, and rumors abound that Pakistan wants to expel all Afghans, even those with documentation. Pakistan says no such decision has been made.

In another Karachi neighborhood with a mostly Afghan population, people scatter when police arrive, disappearing into a maze of alleys. A network of informants spread news of the visits.

Kakar despairs at the plight of Afghans who remain in Pakistan. “Sometimes they don’t have food so we appeal to the UN to help them out,” she said. To earn money or get medical help, they would have previously traveled from such neighborhoods into the heart of Karachi, but they can’t afford these journeys anymore. They’re also likely to be arrested, she added.

Some show Kakar their ID cards from the time of Gen. Zia Ul-Haq, the military dictator whose rule of Pakistan coincided with the 1979 Soviet invasion of Afghanistan. “They wonder why they don’t have citizenship after 40 years. They don’t share their location. They don’t go out. They live in property rented in someone else’s name.”

There are children who were born in Pakistan who have grown up and have children of their own. “The children don’t have any identity paperwork. All of them have an undecided future,” said Kakar.

Syed Habib Ur Rehman works as a media coordinator at the Afghanistan Consulate General in Karachi. He spends a lot of time in these communities.

“There are empty homes, empty shops,” Rehman said. “Markets are empty. The Pakistanis we know don’t agree with what is happening. They say they have spent a good life with us. Their business has gone down because so many Afghan families have left.”

The Afghans interviewed by the AP had different reasons for never securing their status. Some said they were overseas working. Others didn’t have time. Nobody thought Pakistan would ever throw them out.

Mohammad Khan Mughal, 32, was born in Karachi and has three children. Before the crackdown started, the Afghan ran a tandoor business. Police told him to close down.

“My customers started complaining because they couldn’t buy bread from me,” he said. He and his family went to the southwestern city of Quetta in Baluchistan province to escape the raids.

He returned to Karachi a few days later, and has no intention of leaving.

“This is my home,” he said, with pride and sadness. “This is my city.”