ABSTRACT
The most significant economic development between 1977 and 1985, has been the dramatic growth of remittances from the Middle East. The sharp rise is illustrated in Figure 1 below. From the graph one can see how the sudden jump in remittances coincided with the first year of the Zia Government. The rupee value of remittances also registered a sharp rise between 1982 and 1985, on account of the delinking of the rupee from the dollar. In the three-year period, the rupee declined by 52%. This led to a substantial increase in the rupee value of remittances, since the same dollar amount remitted could be exchanged for more rupees. By 1984, remittances constituted the largest single source of foreign exchange earnings. They were four times greater than net aid inflow to Pakistan. Not only did they provide 40% of total foreign exchange earnings, but they also financed 86% of the trade deficit.1 Their volume, $3.2 billion, was substantial in relation to the size of the economy. The value of remittances was approximately equal to 8% of the GNP.
