Pakistan’s struggle with dwindling foreign reserves is no secret. But market insiders argue that with mounting pressures on the economy, unauthorised dealers are steadily siphoning dollars out of legal channels to sell in grey markets across the country and in neighbouring Afghanistan, where they can find lucrative margins. Remittances play a significant role in stabilising Pakistan’s external sector, accounting for nearly 4.2 per cent of the GDP, and providing enough foreign exchange to finance at least 80 per cent the of the country’s oil imports. Historically, remittances have been relatively stable compared to our direct investment and portfolio inflows but that trend has changed this year. Indeed, much of this can be attributed to our inability to attract foreign investment, resulting in an explosive surge of grey market channels which are rapidly replacing legal means of remittance. Pakistan has lost a whopping $3.7bn in remittances this last year, a significant loss that could very well have been avoided if our policymakers had the foresight to attract FDI to export-oriented manufacturing rather than consumption-led industries. Although the rupee has been relatively stable these last few months, an extreme shortage of dollar liquidity and restrictive financial policies for nearly a year have compelled many to turn elsewhere for their dollars. In fact, many food importers from Afghanistan and Iran have consistently relied on the grey market to make their payments with no formal channels available. A gang smuggling dollars in crates of oranges was busted at the Torkham border crossing with Afghanistan, according to local reports. Similar raids were carried out at Peshawar’s Bacha Khan International Airport along with other trade crossings to the country’s Taliban-ruled neighbour. Indeed, until we stabilise our currency for good, we can expect remittances to remain devastatingly low but until then, it is crucial to offer concrete incentives to overseas Pakistanis and remind them that we are worth the investment. The ruling coalition has already pledged incentives for IT professionals and freelancers-a worthwhile investment at a time when we are teetering on the edge of economic collapse. In removing some of the regulatory barriers that ex-pats face on a routine basis, Pakistan may very well be able to boost foreign investment for good. *