Pakistan’s remittances totaled $3.1 billion in December, reflecting a 29.3% increase compared to the same month last year, according to data released by the central bank on Friday. This growth underscores the continued financial support from overseas Pakistanis despite the challenging economic landscape.
The State Bank of Pakistan (SBP) also reported a 5.6% month-on-month rise in remittances, further highlighting the positive trend. For the first half of the fiscal year 2024-25 (July-December), remittances reached $17.8 billion, marking a 32.8% year-on-year increase from the $13.4 billion recorded during the same period in FY24.
The surge in remittance flows is attributed to several factors, including Pakistan’s economic recovery, supported by IMF loans and a stable local currency, as well as incentives for banks and money exchanges. The rise in skilled migration from Pakistan is another contributing factor.
Experts note that improvements in digital infrastructure, a reduction in the exchange rate gap, and reforms curbing illegal foreign exchange trading have all played a role in boosting formal remittance channels. Additionally, global inflation rates have fallen, encouraging Pakistani migrants to send more money home.
Dr. Khaqan Najeeb, former Advisor at the Ministry of Finance, highlighted the key factors driving the rise in remittances, including the expansion of the Pakistani diaspora and higher earnings in key destination countries. He also emphasized that remittances are crucial in managing the country’s external account amid inflation pressures.
In December, remittance inflows came primarily from Saudi Arabia ($770.6 million), the United Arab Emirates ($631.5 million), the United Kingdom ($456.9 million), and the United States ($284.3 million). Other notable sources include Oman, Qatar, Kuwait, and Bahrain.
Remittances play a vital role in strengthening Pakistan’s foreign exchange reserves and supporting the balance of payments. Both the central bank and the government are optimistic that remittances will reach a record $35 billion in FY25.