In the modern economic landscape of Pakistan, few elements are as vital and consistent in their contribution to stability and growth as foreign remittances. As the country navigates through economic challenges, foreign exchange earnings remain the lifeblood of financial health, primarily driven by two key sources: exports and foreign remittances.
The recently released figures by the State Bank of Pakistan (SBP) are not just numbers—they reflect the faith, commitment, and resilience of overseas Pakistanis. In Fiscal Year 2024–25 (FY25), Pakistan received a record $38.3 billion in workers’ remittances. This marks an impressive 26.6% increase from the $30.25 billion received in FY24. The achievement is more than a statistical milestone; it is a testament to the enduring role of our diaspora in supporting the homeland.
Understanding Foreign Remittances
Foreign remittances are the funds sent by overseas Pakistanis to their families and loved ones residing in Pakistan. These transfers are more than just financial flows—they are a symbol of responsibility, emotional attachment, and a sense of duty that millions of Pakistanis abroad feel toward their roots.
From helping families meet day-to-day expenses to financing education, housing, and even small-scale businesses, remittances touch the lives of millions across Pakistan. They provide not only a social safety net but also a substantial cushion for the country’s foreign exchange reserves.
A Strong Diaspora: Pakistan’s Invisible Economic Asset
According to the Bureau of Emigration & Overseas Employment, over 14.38 million Pakistanis have migrated abroad since 1970. Among them, Saudi Arabia tops the list with over 7.39 million Pakistani expatriates, followed by the UAE with 4.39 million. The Gulf region—including Qatar, Oman, Kuwait, and Bahrain—has historically been the primary destination for Pakistani labor migrants.
However, recent trends show growing migration to Europe and North America. Italy, the UK, Romania, the USA, and Canada now host significant Pakistani communities, many of whom consist of highly educated professionals, students, and skilled workers. These individuals are not just representing Pakistan in their professional spheres—they are actively contributing to the national economy through regular and increasingly large remittances.
Why Remittances Are Growing
Several interrelated factors have driven the recent surge in remittances. Speaking to Mettis Global, economic analyst Ali Najib highlighted key reasons:
Improved Economic Conditions in Host Countries: The post-pandemic economic rebound, especially in the Gulf region, has created more job opportunities and higher incomes for overseas workers. These improved conditions have translated into higher savings and the capacity to remit more money home.
Incentives for Formal Channels: The government, through the State Bank of Pakistan and the Pakistan Remittance Initiative (PRI), has provided incentives to channel remittances through formal banking systems. As a result, reliance on informal mechanisms such as hundi and hawala has significantly declined.
Currency and Market Stability: The relative stability of the Pakistani rupee and tighter regulation of the foreign exchange market have made formal banking channels more attractive, reliable, and transparent for both the senders and the recipients.
Strategic Shift Amid Global Uncertainty: In many Western countries, recent political and immigration-related developments—particularly under conservative governments—have created uncertainty for foreigners. In response, many overseas Pakistanis are remitting more funds to invest in Pakistan and secure a financial safety net for their families and potential future resettlement.
A Monthly Glimpse: June 2025
The monthly data for June 2025 alone tells a compelling story. Remittances amounted to $3.4 billion—a 7.8% increase compared to June 2024, although 7.5% lower than the unusually high inflows seen in May 2025. The top sources included:
- Saudi Arabia: $823.2 million
- United Arab Emirates: $717.2 million
- United Kingdom: $537.6 million
- United States: $281.1 million
Interestingly, while Saudi Arabia remained the largest contributor, the most significant growth came from the European Union with a 34% year-on-year increase, and the UK and UAE with a 10% rise each. The United States, however, showed a 13% decline—the only major source country with a negative YoY change, perhaps reflecting domestic economic factors or changes in immigration policy.
Eid Effect and Seasonal Surges
It’s also important to understand the seasonality in remittance flows. For example, in March 2025, remittances hit $4.05 billion—the highest in the fiscal year. This surge coincided with the holy month of Ramadan and the lead-up to Eid-ul-Fitr, when expatriates traditionally send more money home for religious obligations, family celebrations, and community support.
These seasonal highs demonstrate that remittances are not just about economics—they’re deeply embedded in the social and cultural fabric of Pakistani society.
Positive Impact on Pakistan’s Economy
The impact of foreign remittances on Pakistan’s economy is multi-dimensional:
- Support to Foreign Exchange Reserves: Remittances are a major source of foreign currency inflow. This helps stabilize the rupee, strengthen reserves, and reduce reliance on external borrowing.
- Balance of Payments Support: By reducing the current account deficit, remittances ease pressure on Pakistan’s external accounts and contribute to greater macroeconomic stability.
- Poverty Alleviation and Social Uplift: Families who receive remittances can afford better healthcare, education, and housing. In many rural areas, remittances serve as the primary source of household income.
- Boost to Consumption and Investment: Remittance inflows increase domestic demand, stimulate consumption, and in some cases, fund small business ventures, contributing to local economic activity.
- Financial Inclusion: The move toward formal banking channels has encouraged many rural and semi-urban families to open bank accounts and become part of the formal financial system—a key objective in Pakistan’s development agenda.
A National Asset Worth Protecting
The role of overseas Pakistanis in nation-building deserves greater recognition and institutional support. Beyond the billions of dollars they remit annually, they act as ambassadors of Pakistani values, culture, and resilience across the globe. Their hard work abroad and their contribution at home make them a strategic asset in the truest sense.
To further support and strengthen this contribution, the government must ensure:
- Continued incentives for formal remittance channels
- Protection of overseas workers’ rights and welfare
- Investment avenues for expatriates (e.g., diaspora bonds, real estate, and business ventures)
- Transparent and secure digital platforms for remittances
- Recognition and celebration of the diaspora’s contributions in national discourse
A Model for Sustainable Growth
Pakistan’s future economic strength lies not just in domestic production but in the strategic utilization of global linkages—our diaspora being a critical component. As more skilled and educated youth seek opportunities abroad, remittances will likely continue to rise in the short to medium term. But with proper engagement, this can be transformed from mere cash inflow into a more structured model of development financing.
Moreover, by integrating remittance strategy into broader national planning—especially for housing, infrastructure, and education—Pakistan can convert this financial capital into tangible progress for future generations.
In a time when global economic trends are unpredictable, and domestic challenges remain formidable, foreign remittances have emerged as a steady, reliable, and robust pillar of Pakistan’s economy. The record inflow of $38.3 billion in FY25 is not just a financial milestone—it is a reminder of the unbreakable bond between overseas Pakistanis and their homeland.
As Pakistan strives to build a sustainable, resilient, and inclusive economy, the role of remittances and the people behind them must be placed at the center of our national priorities. It is only through acknowledgment, facilitation, and long-term planning that we can fully harness the potential of this invaluable economic and emotional resource.
