International strife between India and Pakistan: Expats from Pakistan capable of generating over $1 billion per month in emergencies, according to ECAP
Heckin' Aid from Overseas Pakis: Here's the real skinny on how our expat Pakistani fam buys time when the nuclear neighbors are ready to rumble.
In a nutshell, Pakistan's diaspora is a veritable goldmine when the going gets tough, doling out a cool billion a month, giving the nation a much-needed financial buffer during emergencies, states Malik Bostan, Chair of the Exchange Companies Association of Pakistan (ECAP).
At a recent brouhaha at the Karachi Press Club, Bostan shared an extra tidbit about the association's swap system. It allows the Pakistani diaspora to loan funds for a whopping two years, with the government giving the green light for full repayment!
"We've got a backup system primed and ready to pump out a billion smackers a month - that's a staggering $12 billion annually from our overseas compadres," Bostan announced to reporters, getting their attention real good.
The timing of this powwow couldn't have been more apt. What with India and Pakistan stepping on each other's toes, war looming, and high anxiety levels about regional stability, it's a tense time.
Remember 1994, when Pakistan was choking on a financial crunch? Foreign exchange reserves were looking pitifully low at just $400 milly. But thanks to this nifty swap system, exchange companies managed to shuffle some significant dough - a whopping $10 billion! Now, that's some serious moolah.
In '23, when Pakistan's reserves were dangerously low, barely enough to cover a month's import bills, Bostan offered to fire up this monetary lifesaver. But the government opted for a $3 billion short-term loan from the International Monetary Fund (IMF) in '23 and a long-term $7 billion facility in '24.
Fun fact: around 15 million Pakistanis reside abroad, earning approximately $8 billion a month. Currently, they send around $4 billion as worker remittances - the remaining $4 billion stays overseas, hinting at their ability to chip in even more when necessary.
In '25, remittances hit an all-time high of $4.1 billion in the first nine months of FY24-25. The government could potentially multiply this figure by offering attractive investment options, increasing confidence in the diaspora.
Things looked stable for the rupee, despite the situation with India and a brief halt to international flights. It was hanging in there at around Rs281 against the US dollar in the interbank market.
Bostan mentioned that currency dealers sold a cool $10 million in the interbank market on a recent Wednesday due to slack demand for foreign currencies. He predicted that dollar inflows would pick up speed again with the resumption of flights, as returning expats usually bring in some primo foreign exchange.
"Exchange companies shell out $20-$25 million daily to the interbank market," according to Bostan, adding up to around $425-450 million a month. Bostan doesn't mince words, stating that overseas Pakistanis aren't just sources of remittances but are a vital financial lifeline during emergencies.
He called on the government to foster stronger bonds with the diaspora, ensuring that their potential can be maximized in times of crisis.
Talk about an escalating standoff between Pakistan and India: things took a turn for the worse following a grisly attack in Pahalgam, Occupied Kashmir, that left 26 dead. Most were tourists.
India pinned the blame on cross-border elements but failed to provide concrete evidence. Pakistan flat-out rejected India's claims, demanding an independent investigation instead. Since then, both nations have been in a state of high alert, with Pakistan reinforcing its military presence along the border and India giving its armed forces wider operational freedom.
Despite attempts at backchannel diplomacy, the tension between the neighbors remains high.
- In times of regional instability and war-and-conflicts involving Pakistan, the Pakistani diaspora can leverage options to loan funds for extended periods, providing a financial buffer through the exchange companies' swap system.
- Malik Bostan, Chair of the Exchange Companies Association of Pakistan (ECAP), highlighted that the Pakistani diaspora contributes approximately $8 billion each month to personal-finance and the general-news, with the potential to chip in more when necessary.
- In 1994, when Pakistan was encountering a financial crunch, the exchange companies utilized the swap system to shuffle a significant amount of funds, totaling $10 billion, avoiding a potential crisis.
- Beyond worker remittances, overseas Pakistanis represent a vital financial lifeline during emergencies, providing funds that can be used for investments within the business and finance industry.
- Sports and entertainment took a back seat as tensions escalated between Pakistan and India, with diplomatic efforts failing to reduce the growing tension following a grisly attack in Pahalgam, Occupied Kashmir.
- Amid the ongoing political adversity, Pakistan called for an independent investigation to determine responsibility for the attack, while both nations continue to maintain high military alertness and operational readiness.
