In August 2024, the country recorded a significant increase in remittances, reaching $2.94 billion, the year-on-year growth stood at 40.5 percent. This surge is largely attributed to overseas Pakistani workers sending money back home, particularly from major markets like Saudi Arabia, the UAE, the UK, and the USA. With remittances being a crucial pillar for Pakistan’s economy, this influx has played a critical role in supporting the country’s foreign exchange reserves. The rise in remittances was also much needed, particularly amid normalizing repatriation outflows.
The cumulative inflows for the first two months of the fiscal year (2MFY25) witnessed a growth of 44 percent year-on-year with significant growth seen flows from the UAE, KSA and the GCC world. This heightened monthly trend has continued over the last three consecutive months as employment opportunities in Middle Eastern countries like Saudi Arabia and the UAE have improved, with an increasing number of Pakistanis finding work in these regions.
Moreover, the government and the State Bank of Pakistan (SBP) have also introduced policies to encourage the use of formal channels for sending remittances. Incentives for banks and exchange companies to attract more inflows, especially from blue collar workers, have been part of this push.
To ensure that the remittance inflows remain robust, it is essential for Pakistan to continue strengthening formal remittance channels and maintaining a competitive exchange rate. In the longer term, maintaining stable economic policies and enhancing incentives for formal remittance channels will be key to securing a sustainable inflow of remittances.
Comments