TLDR:
• remittances boost economic stability
• stable currency drives diaspora support
• record inflows aid foreign reserves
ISLAMABAD (The Thursday Times) — Pakistan’s remittance flows reached record highs in December, demonstrating the country’s growing reliance on overseas workers’ contributions. With $3.1 billion sent home during the month, remittances rose by over twenty-nine percent year-on-year, supported by a mix of policy reforms, a steady currency, and an expanding diaspora.
Increased remittance flows linked to reforms and stability
The surge is tied to economic stabilisation efforts, which include curbing illegal currency trading and incentivising formal remittance channels. A steady rupee and reduced exchange rate gaps have further encouraged migrant workers to use official methods to send money home. Pakistan’s workforce abroad is increasingly using digital channels, reflecting the strengthening of infrastructure and accessibility.
The State Bank of Pakistan noted that during the first six months of the fiscal year, inflows amounted to $17.8 billion. This figure represents significant growth compared to the previous year, suggesting reforms and policy measures are delivering results. A stable economy, bolstered by IMF loans and stronger foreign reserves, has amplified the impact of remittances.
Key sources of remittances
Saudi Arabia and the UAE remain dominant contributors to Pakistan’s remittance inflows, driven by a large labour force in these countries. Other major sources include the United Kingdom and the United States, where skilled workers have benefited from higher wages. Gulf Cooperation Council (GCC) countries like Oman, Qatar, and Bahrain also provided substantial remittances, albeit on a smaller scale.
Digital evolution and diaspora impact
Pakistan’s digital payment ecosystem has played a pivotal role in facilitating these inflows. The government’s focus on digitalisation, coupled with banking sector incentives, has streamlined the process for overseas workers. This efficiency, paired with a rising number of Pakistani expatriates, continues to shape the country’s economic recovery.
High inflation at home has also increased dependence on remittances for household support. With rising costs of living, families rely on these funds to cover basic needs. Remittances not only bridge the financial gap for families but also contribute to the country’s foreign exchange reserves, vital for improving the balance of payments.
Government sets ambitious targets
The Pakistani government projects remittance inflows to reach a historic high by the end of the fiscal year. This optimism aligns with ongoing reforms and increased global demand for skilled labour. A stable currency and economic recovery offer further incentives for expatriates to send money through official channels.
Prime Minister Shehbaz Sharif has lauded the uptick in remittances as a testament to overseas Pakistanis’ commitment to national development. The government remains focused on sustaining this upward trend by enhancing economic opportunities and maintaining political stability.