Pakistan Institute of Development Economics, Islamabad

Workers' Remittances from the Middle East and their Effect on Pakistan's Economy [with
Comments]
Author(s): Nadeem A. Burney and Meekal Aziz Ahmad
Source: The Pakistan Development Review, Vol. 26, No. 4, Papers and Proceedings Fourth
Annual General Meeting of the Pakistan Society of Development Economists (PSDE) Islamabad,
August 1-3, 1987 PART II (Winter 1987), pp. 745-763
Published by: Pakistan Institute of Development Economics, Islamabad
Stable URL: http://www.jstor.org/stable/41259012 .
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The Pakistan DevelopmentReview
Vol. XXVI, No. 4 (Winter 1987)

RemittancesfromtheMiddleEast and
Workers9
theirEffecton Pakistan'sEconomy

N ADEEM A. BURNEY*

I. INTRODUCTION

In recentyears,remittances, especiallyfromthe MiddleEast (ME), have be-

come an important sourceof foreignexchangeearningsforPakistan. The absolute
amountof theseremittances, overthelastseveralyears,havebeenso large,thatthey
werebound to havea significant impacton thePakistanieconomy,through improv-
ingits balanceof paymentspositionand reducing itsdependenceon externalfinanc-
ing. For example,in 1982-83 the inflowof remittances fromthe MiddleEast to
Pakistan,throughofficialchannels,was 2.4 billionU.S. dollarswhichwas 70 percent
of totalexportsof goodsandnon-factor services.The recentdeclinein oil pricesand
the slowingdownof economicactivityin the MiddleEast,however,has resultedin
thereductionof the inflowof remittances.The mainconcern,now,is whatwould
thelevelof remittances be in futureyearsand how willthe economyreadjustitself
to thereducedinflowoftheremittances.
This paper makes an attemptto analysethe impactof remittances on the
Pakistanieconomy,in particular,on broad economicindicatorsas GNP growth,
saving,and balanceof payments(BOP), from1969-70to 1985-86. SectionII esti-
matesthe contribution of the remittances, fromtheMiddleEast, to the growthin
the GrossNationalProduct(GNP), over different sub-periods.In SectionHI, an
analysis of the relationshipbetween national/domestic savingsand remittances is
given. Section IV discussesthe impact of remittanceson the balance of payments
positionofPakistan.Finally,themainfindings aresummarized in SectionV.

II. CONTRIBUTIONOF REMITTANCESIN GNP GROWTH

There is no doubt about the factthat,duringthe past ten years,increased

inflowof the remittancesfromthe MiddleEast has helpedPakistan'seconomyin

♦The author is Senior Research Economist at the PakistanInstituteof DevelopmentEco-

nomics,Islamabad. This paper is a revisedversionof the paper presentedat the meeting.Some of
the discussionsare missingfromthis versionbecause of the restrictionimposedon the size of the
paper. This, however,does not affectthe main argumentin the paper. The originalversionis
available fromthe authoron request.

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746 AradeemA. Burney

sustaininga reasonablerateof economicgrowth.Nothing, however, is knownabout

the exact magnitudeof its contribution to the growthof GNP. Usingthe growth
accountingframework, GNP growth,overa period,can be expressedas a weighted
sum of its components, e.g. consumption, investment, exports,importsand remit-
tances[see Burney(1986) fordiscussionon themethodology] . It maybe mentioned
here thatthisgrowthaccountingframework underestimates the truecontribution
of remittances to the GNP growthin the sense thatit measuresonly the direct
contribution.Since, remittances are a kind of incometransfer, used to finance
domesticconsumption, investment, and importdemand,the contribution of these
components includesthe indirect contribution of theremittances as well. The extent
oftheunderestimation depends on the impactmultipliers of the remittances.
Using the growthaccountingframework, GNP growth,during1969-70 to
1985-86,overdifferent sub-periods, has been decomposedintoits principalcompo-
nents. Remittances receivedthrough theofficialchannelshavebeenconsideredfirst,
followedby adjustedremittances whichtakesintoaccountremittances through the
unofficialchannels.1Consumption andinvestment werefurther dividedintoprivate
andpublic. The resultsarepresented in Tables1 and 2, respectively.
The estimatesindicatethat the contribution of remittances fromtheMiddle
East to GNPgrowth was thehighest, i.e. 13.6 percentof GNPgrowth, duringthesub-
-
period 1973-74 1976-77. Whenremittances throughthe unofficial channelsare
also takenintoaccount,theircontribution to theGNPgrowth was as highas 24 per-
centof the GNP growth, i.e. almostone-fourth of the totalgrowthin GNP. Thisis
because the remittances grewat a verysharprateduringthe specifiedperiod. The
estimatebased on remittances receivedthrough officialas wellas unofficial channels
servesas an indicatorof upperlimiton the contribution of remittances to theGNP
growth.
It maybe notedthatoverthe periodunderstudy,the averageannualgrowth
rateof GNP, during1976-77to 1979-80,was the highest,i.e. 8.07 percent.During
thisperiod,the contribution of remittances fromthe MiddleEast,throughofficial
channels,was over10 percentoftheGNPgrowth.As thecontribution of theremit-
tancesdeclinedand becamenegativeduring1982-83to 1985-86,theaverageannual
growthrateof theGNPalso droppedto 6.05 percent.Thissuggests thatifin future,

1Remittances channelsare takenintoaccountby adjusting

the unofficial remit-
through
tancesthrough theofficial channels usingestimatesfromtheILO/ARTEPsurvey report.Accord-
ingto one estimateof theILO/ARTEPsurveyreport, remittancesthrough theofficial
channels
are only57 percentof thetotalremittances. Thismethodofadjusting official
remittancessuffers
fromsomeproblems, e.g. (i) theILO/ARTEPestimate is basedoncertainassumptionswhichmay
be validforthisstudyand (ii) theestimate,
not necessarily whichis basedon data forone year
only,is highlyunlikely to be constantovertimeas assumedin thispaper.However, underthe
thereis no better
circumstances, alternative.

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750 NadeemA. Burney

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 Remittances
Workers' from East
Middle 751

the amountof the remittances

continueto fall,otherthingsremaining
thesame,the
GNP growthwilltendto be lowerthanthatof the GDP, as in 1982-83- 1985-86
period.

ID. REMITTANCES AND SAVINGS

growth,the propensity
For achievingself-sustained to savemustincreaseover
time. Pakistan'seconomyshowedsucha trendin the Sixtiesbut could notsustain
it in the Seventiesand Eighties. Therefore,for the formulation of appropriate
policiesin orderto promoteeconomicgrowth, it is important
thatan analysisof the
changesin savingsovertimebe undertakento focuson the mainfactorsaffecting
savings.
Economy-wide estimatesof savings,in Pakistan, are obtainedusingtheindirect
methodof subtracting net foreign resourceinflowfromgrossdomesticinvestment.
The method,based on theex post nationalincomeaccountsidentity, treatsnational
savingsas a residualsince,bothinvestment and thebalanceof paymentsappearon
the expenditure side. Grossdomesticsavings(GDS), on theotherhand,is obtained
by subtracting net factorincome fromabroad (NFI)2 fromthe nationalsaving
(GNS).3 The savingseries,estimatedon thebasisoftheabovemethod,arepresented
in Table3.
Till 1973-74,net factorincomefromabroad,whichincludesworkers'remit-
tances,was not significant and thechoicebetweenGNS and GDS was of littlerele-
vance. However,because of an increasein workers'remittances, the difference
betweenthe two serieshas becomesignificant and it is nowargued thatnationalsav-
ingis theappropriate measureof savingsfortheeconomy.
As explainedearlier,grossdomesticsavingsarethedifference betweenthetotal
consumption and the GDP. Since workers' remittances are used to supplement
domesticinvestment and/ordomesticconsumption, the totalconsumption includes
consumption financedfromthe remittances (Amjad 1986). Thus,as the percent-
age shareof the remittances in the GNP increases,the above definition of gross
domesticsavingstends to, systematically, understate the domesticsavingefforts.
Thisis evidentfromthesavingratesreported in Table3. Whereas, thegrossnational
savingrate remainedover 14 percentin the latterhalf of the Seventiesand the
Eighties,the grossdomesticsavingrate declined,almostcontinuously, from10.8
percent in 1975-76 to 5.04 percent in 1984-85. During this period,the shareof
remittances, in GNP,increasedfrom1.5 percentin 1975-76to 7.6 percentin 1982-
83, butdroppedto 6.2 percentin 1984-85.

2 Net factorincome fromabroad includesworkers'remittancesand is net of other

private
transfers.
3
grossdomesticsavingcan also be obtainedby subtracting
Alternatively, total consumption
fromgrossdomesticproduct(GDP).

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752 Nadeem
A. Burney

Table3

SavingSeriesand SavingRates
Gioss Gross
National Domestic National Domestic Remittances
as
Years Saving Saving Saving Saving of
Percentage
Rate* Rateb GNP
MillionRupees)
(Current
1969-70 6239 6236 13.06 13.06 NA
1970-71 6409 6491 12.63 12.78 NA
1971-72 6958 6859 8.49 12.55 NA
1972-73 9472 9009 14.77 13.35 0.4
1973-74 8989 8372 10.13 9.50 0.4
1974-75 9343 8196 832 737 0.7
1975-76 17076 14084 12.81 10.80 1.5
1976-77 21586 16106 13.91 10.76 2.8
1977-78 27673 15534 14.68 8.81 4.9
1978-79 28409 13876 13.55 7.11 5.2
1979-80 36536 18252 14.45 7.78 5.3
1980-81 43743 21051 14.55 7.57 5.5
1981-82 46913 21564 13.51 6.70 5.6
1982-83 65215 25820 16.25 7.31 7.6
1983-84 66136 26541 14.45 635 6.9
1984-85 61997 23686 12.19 5.04 6.2
1985-86 81221 38294 14.24 7.26 5.7
Notes: "Expressed as percentageof GNP.
bExpressed as percentageof GDP.

Fromthe above discussion,one may concludethatthe declinein the gross

domesticsavingrateis becauseoftheaccounting procedureand doesnot,necessarily,
reflecta shiftin thedomesticsavingbehaviour.If thisis true,thena simplesolution
would be to adjustthe domesticsavingseries,takingintoaccountthatpartof the
consumptionwhichis financedfromremittances.This is done by subtracting a
fractionof thetotalremittances,ratherthantheconventional methodof subtracting
the whole amount,fromthe grossnationalsavingseries. Accordingto the recent
ILO/ARTEP surveyreport,the remittances receivinghouseholdsspendabout 60
percentof the remittances- on recurring consumption,consumerdurables,and
occasionssuch as marriages/Haj,and the remaining 40 percentare saved/invested.
Using these estimates,
grossdomestic savingsserieswere adjustedby subtracting40
percent of theremittances
from GrossNational Saving. The adjusteddomestic saving
seriesand the savingratesare reportedin Table 4. The estimatesshow that the

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 Remittances
Workers' fromMiddleEast 753

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754 NadeemA. Burney

adjusted savingrates are not only comparativelyhigherin relationto the unadjusted

ones, but also they do not decline continuously.
The gross national savings,and the adjusted domestic savingstake into account
remittancesreceivedthroughthe officialchannels only. Thus, it is likely that they
may be understatingthe actual level of savings in the economy. The actual gross
national and domestic savingsestimates,based on the actual flow of remittances,
are reported in Table 4. The estimates show that the actual gross national and
domestic saving rates, are much higher than those obtained from the national ac-
counts. They, further,confirmthat therehas been no significantbehavioural shift
in the domesticsavingefforts.
To furtherinvestigatethe domestic saving behaviour, simple ordinaryleast
square regressions,both in linear as well as in log-linearforms,were estimated,over
three differentperiods: (1) 1959-60 - 1973-74, a period when the inflowof remit-
tances was not significant,(ii) 1973-74 - 1985-86, a period of increased remittances
inflow, and (iii) 1959-60 - 1985-86, using gross domestic product (GDP), remit-
tances, and expected inflationrate as the explanatoryvariables. If remittanceshad
affected domestic savingbehaviour adversely,it is expected that its coefficientwill
be negative. The expected inflation rate is included as the opportunitycost of
saving. If people expect that the inflationrate in the futurewill be relativelyhigher,
they may or may not save more. A negative coefficientwill indicate that people
substitute their future consumption for present consumption and save less in re-
sponse to a higherexpected inflationrate. To determine,whethertherehas been any
structural and/or behavioural shift in the domestic saving behaviour between
1959-60 - 1972-73 and 1973-74 - 1985-86, a dummy variable, both in additive
as well as in multiplicativeform,was used in the regressionforthe period 1959-60 -
1985-86. The dummy variable takes a zero value when remittanceswere not im-
portant,i.e. 1959-60 - 1972-73, and one forthe period which experiencedincreased
remittancesinflow,i.e. 1973-74 - 1985-86. The estimatedregressionsare reported
in Table 5.
A comparison of the coefficientsof GDP in Equations 1 and 2 indicates that
there has been a small decline in the domestic marginalpropensityof save out of the
GDP from0.15 to 0.14 between 1959-60 - 1973-74 and 1973-74 - 1985-86. How-
ever, when remittancesare included in the regression,the coefficientjumps to
0.185, as can be seen fromEquation 3. The estimatesfurthershow that domestic
marginalpropensityto save out of remittancesis negative. These two results,taken
together,suggeststhat at the aggregatelevel, remittancesare used mainly for con-
sumptionand they have helped in freeingdomestic resourceswhich are beingsaved.
The estimatesof domestic savingelasticitieswith respect to the GDP and the remit-
tances, as can be seen fromEquation 5 through7, furtherconfirmthese results. The
additive dummyhas a negativesign and is significant,thus suggestingthat therehas

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 Workers' fromMiddleEast
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7 56 NadeemA. Burney

been a structurallysignificantdecline in domestic saving,because of the remittances.

The coefficientof the multiplicativedummy,althoughnegative,was not significant.
This supportsthe argumentthat remittanceshave not adverselyaffectedthe domes-
tic savingbehaviour.

ANDTHEBALANCEOF PAYMENTS
IV. REMITTANCES
As workers' remittanceshave supplemented foreignexchange availabilityto
Pakistan's economy, it is widely recognizedthat increasedremittancesinflow,signif-
icantly,improvedthe balance of payments (BOP) position duringthe second half of
the Seventiesand the early Eighties. Table 6 givesthe BOP position of the Pakistani
economy from 1974-75 through1985-86. It shows that as the shareof remittances
from the Middle East in the GNP increased from 0.7 percent in 1974-75 to 7.6
percent in 1982-83, the currentaccount deficit as a percentageof the GNP drop-
ped from 10.3 percentto 1 3 percent. Witha decrease in the shareof remittancesin
the GNP to 5.7 percent in 1985-86, the currentaccount deficithas increasedto 3.2
percentin the same period. At theirpeak in 1982-83, remittancesfromthe Middle
East were 80 percentof the trade balance.
To what extent,has this improved BOP situationhelped the growthperform-
ance can be determinedfromFigure 1. In general,it can be said that as the shareof
the remittancesfrom the Middle East (RME) in the GNP, increases,the national
saving rate (NSR) increases and the currentaccount deficit(CAD), as a percentage
of the GNP, decreases. This has accelerated the GNP growthrate. Withthe decline
in the share of RME in the GNP, after 1982-83, the NSR has declined and the share
of the CAD, in the GNP, has increased but only till 1984-85. Both have improved
appreciablyin 1985-86. The GNP growth,however,has slowed down, only, during
1983-84 and has accelerated since then. This improvementin the CAD and the NSR
in 1985-86 and acceleration in the GNP growthsince 1983-84, can be attributedto
some improvementin the internationalterms of trade (TOT) since 1981-82, see
Table 6.
The foreign exchange availability through workers' remittances,from the
Middle East, has not only helped the economy in sustaininga reasonablyhigh GNP
growthrate, by reducingthe currentaccount deficit,it has also reduced its external
debt burden and has improved its debt-servicingability. Table 7 brings this out.
While the ratio of external debts (Disbursed and Outstanding) to the GNP has in-
creased from29 percentin 1969-70 to 49 percentin 1973-74, but has starteddeclin-
ing since continuously,comingdown to 29.5 percentin 1982-83, a period of increas-
ing share of RME in the GNP. Since then, however, the Debt/GNP ratio has in-
creased to 31.4 percent togetherwith a decline in the shareof the RME in the GNP.
Debt servicingwhich was 52 percent of the total exports receiptsin 1969-70 was

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 Workers'
Remittances
fromMiddleEast 757

NSR

17
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CAD/GNP

Fig. 1.

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758 NadeemA. Burney

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 Workers'
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760 AradeemA. Burney

only 8.8 percentof the total foreignexchangeearningsin 1981-82. Later,it has

increasedto 12.6 percentof thetotalforeign exchangeearnings due to thedeclinein
theshareof RME in theGNP duringthisperiod.
The increasedinflowof remittances had also greatlydecreasedtheneed for
additionalforeignloans to financethe development expenditure.This is evident
fromTable7. Between1969-70and 1973-74,newforeign loansandcreditcontracts
had increasedat an averageannualrateof 25.67 percent.The sharpest increasecame
between 1972-73 and 1973-74, i.e. afterthe firstoil price increase. Between
1973-74and 1976-77,thenew foreign loans contractedhad decreasedat an average
rateof 8.14 percent.Theseloans againhad increasedsharply between1978-79and
1979-80,i.e. afterthe secondoil priceincrease. This had resultedin an average
annualgrowthrateof 14.63 percent,fortheperiod1976-77to 1979-80. Between
1979-80and 1982-83,a periodof increasedinflowof remittances, newforeign loans
contracteddecreasedat an averagerateof 4.36 percent.As remittances decreased
after1982-83,new foreignloans contractedincreasedat an averagerateof 11.87
percentbetween1982-83and 1985-86.
Withthe sharpincreasein thepriceof oil overtimeandtheresulting increase
in thelevelofeconomicactivity in theMiddleEast,muchfocushad beenlaidon the
analysisof (i) the flowof migration and its effectson the labourmarketsof the
labour-exporting countries,and (ii) workers* remittances and theireffectson the
labour-exporting economies. Surprisingly, nothinghad been said about theeffects
whichtheincreasedlevelof economicactivity, in the MiddleEast mayhave on the
demandforthe exportsof thelabour-exporting countries.Table 8 giveschangesin
the shareof Pakistan'sexportsto the MiddleEast in itstotalexports.Theevidence
indicatesthatduring1973-74 to 1982-83,when,due to increasein the oil price,
economicactivityin theMiddleEastwas booming,theshareof Pakistan'sexportsto
theMiddleEast,in itstotalexports,had increasedfrom16.3 to 34.3 percent.As oil

Table8

Changesin ExportShare
TotalExports
Years Exportsto MiddleEast
MillionUS $ % of GNP (% of TotalExports)
1969-70 338 3.4 11.6
1973-74 1026 11.5 16.3
1976-77 1141 7.3 27.3
1979-80 2365 9.3 20.1
1982-83 2694 8.5 34.3
1985-86 3070 8.7 16.9

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 Remittances
Workers' fromMiddle
East 761

pricesdecreasedand economicactivityin theMiddleEast sloweddown,demandfor

the Pakistaniexports,also, droppedand its shareof exportsto the MiddleEast
declinedto 17 percent.The shareof totalexportsin the GNP, on theotherhand,
had changedonlymarginally. Thissuggeststhat,withtheslowingdownof economic
activityin the MiddleEast,the labour-exportingeconomies,likePakistan,arelikely
to face BOP problems,not only because of the reducedamountof remittances, a
sourceof foreignexchangeearnings, but also, becauseof the declinein thedemand
fortheirexportsin theMiddleEast.

V. CONCLUSION

In thispaper,we haveanalysedtheimpactof remittances fromtheMiddleEast

on Pakistan'sGNP growth,domesticsavingsand the balanceof payments.It had
been shownthat: (i) If,in future,the amountof remittances continueto fall,other
thingsremaining the same,not only will the GNP growth be lower thanthatofthe
to maintaina highrateofgrowth,
GDP but it will also be difficult (ii) The declinein
the domesticsavingrateis due to theaccounting procedureand doesnotnecessarily
reflecta shiftin the domesticsavingbehaviour, (iii) The foreign exchangewhich
has been made availablebecauseof the workers'remittances from the MiddleEast
has not onlyhelpedin reducing thecurrent accountdeficit,buthas also reducedthe
externaldebtburden,has improved ability,andhas decreasedtheneed
debt-servicing
foradditionalforeign loans, (iv) Withthe slowingdownof economicactivity in the
Middle East, Pakistanis likelyto face balance of paymentsproblems not only
becauseof the reducedamountof remittances but also becauseof thedeclinein the
demandforitsexportsin theMiddleEast.

REFERENCES

Amjad,Rashid(1986). "Impactof Workers'Remittances fromthe MiddleEast on

Pakistan'sEconomy Some SelectedIssues". Pakistan
DevelopmentReview.Vol.
XXV, No. 4. pp. 757-782.
ARTEP (1987). Impactof Out and ReturnMigration on DomesticEmployment in
Pakistan.Vols. I-VI. India:NewDelhi.
Burney,Nadeem A. (1986). "Sources of Pakistan'sEconomicGrowth".Pakistan
Development Review. Vol. XXV, No. 4. pp. 573-587.
Pakistan,Government of (1986). PakistanEconomicSurvey:Statistical
Supplement
1985-86. Islamabad: Finance Division,Economic Adviser'sWing.Ministryof
Finance.

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 Commentson
RemittancesfromtheMiddleEast and
"Workers9
theirEffecton Pakistan'sEconomy"

This paper deals with an importantsubject. But, it failsto come to gripswith

the real issues at hand. The analysis is trivialand cavalier and the resultsof various
econometricapplications misleading. The paper startsout with a growth-accounting
framework,aimed at assessingthe contributionof remittancesto economic growth.
Using five arbitrarysub-periods,various ratios are calculated. The profoundconclu-
sion derived fromthis analysis is that when remittancesrose, so did GNP and vice-
versa. This discoveryis followed by an assessmentof the impact of remittanceson
domestic demand and output across various sectors. Here, the author's conclusions
are contradictedby the data he presentshimselfin Table 3. The reasons forthisslip
is that his analysis is based on the uncriticalapplication of Amjad's (1986) data and
paper and an insufficientunderstandingof how the national accounts are compiled.
The author, evidently,did not see nor read my published (and hence readily acces-
sible) commentson Amjad's work.
The paper thenmoves on to examine the link between remittancesand savings.
This could have been an interestingexercise. Instead, withno theoreticalframework
we are confrontedwith a number of regressionsbetween domestic savings,remit-
tances, GDP and the expected rate of inflation. The resultsare most unsatisfactory.
Looking at the unadjusted savingsseries first,it is claimed that a comparisonof the
resultsin Equations 1 and 2 (the linear relationship)show a decline in the domestic
marginalpropensityto save without even applyingthe most basic tests forstatistical
differencesin estimatedcoefficientsderived fromdifferentsub-periods. It is further
argued that the coefficienton GDP 'jumps to 0.185* followingthe inclusion of
official remittanceinflows (not surprisinglyif GDP and remittancesare highlyco-
linear in the observations) and the domestic marginal propensityto save out of
remittancesis negativeat -1 .03, whateverthat numberis supposed to mean. In any
event, gross disposable income not gross domestic product is the more appropriate
variable to use in the savingsfunctionand I suspect that the resultswould be quite
differentif this adjustmentwere to be made. The elasticityof savingswith respect
to GDP in the log-linearformulationis as high as 2 (which is splended news for
planners and policy-makersstrugglingwith Pakistan's vexing low domestic savings
problem) and bounces around from 1.45 to 2.06 withsmall changesin specification.

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 Comments 763

But these bizarrenumbersand the instabilityof the estimatesdo not deterthe

author.Nordoes thestarkevidenceon severeauto-correlation in someoftheresults.
The*Adjusted*domesticsavingsfunctionestimatedforthe fullperiodFY 74-86
(resultsreportedin Table 2) producesevenmoreodd resultswithremittances now
beingpositively (ifinsignificantly)correlatedwithsavingsrates! Theauthoralso con-
fusesthereaderfurther by claimingin one breaththat'therehasbeena structurally
significant decline in domestic savingsbecause of remittances' whilesubsequently
arguingthat 'remittanceshave not caused any behaviouraldeclinein domestic
savingsefforts*.Presumably thekey wordhereis 'behavioural'as opposedto 'struc-
tural'as represented by the statistical
significance(or lackofit) ofthemultiplicative
and additivedummies,respectively.I am afraidthe importance of thisdistinction,
eitheras a historicalfact(whichneeds an explanation)or forpolicy-making puj-
poses,eludes me. In none of the regressions is themacro-economic setting(both
domesticandexternal)or thepolicystanceof thegovernment discussedor relatedto
thechoiceof sub-periods or theeconometric results.One wonderswhaton earthto
makeof all this.
The finalsectionof the paper deals withthe impactof remittances on the
balanceof payments.Herethereare further profundities such as the view thatthe
risein remittances reducedthecurrentaccountdeficitandtheextraordinarily naive
claimthatremittances havenotled to an increasein consumer goods'importsso that
all is well. Apparently, the authorhas not heardof thephenomenon of smuggling,
variously estimated at 40 percent or more of recorded imports into Pakistan,and
whichis obviouslynotincludedin officialtradestatistics.

Commission,
Planning Meekal Aziz Ahmad
Islamabad

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