Saudi Arabia leads surge as Pakistan's May remittances hit $3.7 billion
KARACHI: Pakistan received $3.7 billion in workers' remittances in May 2025, a strong 16 percent increase month-on-month and 13.7 percent year-on-year, the State Bank of Pakistan (SBP) said on Wednesday, with Saudi Arabia remaining the largest contributor, sending $913.9 million.
The inflows brought total remittances for July-May FY2024-25 to $34.9 billion, marking a 28.8 percent increase from $27.1 billion in the same period last year. The rise follows a record breaking $4.1 billion in March, the highest-ever single-month inflow, and a robust $3.2 billion in April.
The strong performance has helped offset Pakistan's trade deficit and support its fragile foreign exchange reserves amid continued macroeconomic pressure.
'This is the highest level of remittances recorded in recent months,' the SBP said in a statement, noting that the increase reflected stronger flows from key corridors and a growing shift toward formal remittances channels.
Analysts attribute the surge to a combination of factors, including improved exchange rate management, government crackdowns on hawala and hundi informal systems for transferring money internationally, and seasonal flows during Ramadan and Eid.
Saudi Arabia remained the largest contributor in May, sending $913.9 million, followed by the United Arab Emirates ($754.2 million), the United Kingdom ($588.1 million), and the United States ($314.7 million).
Remittances remain a critical source of foreign exchange for Pakistan, which is currently under a $7 billion IMF program and facing over $24 billion in external debt repayments over the next fiscal year.
The central bank has raised its full-year remittance forecast to $38 billion, reflecting optimism that flows will continue to support economic stabilization.
The surging remittances, especially from Saudi Arabia, help cushion Pakistan's chronic current‑account deficit and bolster its foreign exchange reserves, offering relief ahead of major debt repayments. With global commodity prices still volatile and external financing constrained, continued inflows from overseas workers, particularly from the Gulf, are seen as crucial to maintaining macroeconomic stability and supporting Pakistan's growth outlook under IMF conditions.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Argaam
an hour ago
- Argaam
Saudi foreign reserve assets up 4% to SAR 1.72T in May
Saudi Arabia's foreign reserve assets rose by about SAR 73.6 billion, or 4%, month-on-month (MoM) to SAR 1.72 trillion in May, according to the Saudi Central Bank (SAMA). Reserve assets include investments in foreign securities, foreign cash and deposits, reserve position in the International Monetary Fund (IMF), special drawing rights (SDRs), and monetary gold. Foreign currency reserves, representing about 95% of total assets, declined by nearly 2% year-on-year (YoY) to SAR 1.62 trillion in May. Moreover, IMF reserves went down by 1% to SAR 12.7 billion last month. Meanwhile, SDRs rose by 3% to SAR 80.2 billion in May. Gold reserves remained unchanged at SAR 1.62 billion, maintaining the same level since May 2008.
Arab News
3 hours ago
- Arab News
Pakistan urges EU to continue GSP+, raises alarm over India's water treaty violations
KARACHI: A high-level Pakistani delegation visiting Brussels on Thursday urged European Union officials to support the continuation of Pakistan's preferential trade access under the GSP+ scheme, while also raising concern over India's alleged violations of the Indus Waters Treaty. The delegation, led by former foreign minister Bilawal Bhutto Zardari, met with Bernd Lange, chair of the European Parliament's International Trade Committee, to discuss regional tensions following a recent military escalation with India, the worst confrontation between the nuclear-armed neighbors in decades. The group previously visited Washington and London as part of a broader diplomatic effort to rally international support after the conflict in which the two nations exchanged drones, missiles, and artillery strikes between May 7-10 before a ceasefire was announced. Since then, both countries have launched diplomatic offensives to present their narratives on the conflict and its causes. 'We just had a meeting with their [EU] trade representative, where we conveyed Pakistan's message of peace,' Bhutto Zardari told reporters after the meeting. 'In that context, we specifically raised the decisions related to the Indus Waters Treaty, which are violations of international law, and in the EU context, they strongly believe in respecting treaties and adhering to international law. So, in that context, we pitched our case.' The 1960 Indus Waters Treaty, brokered by the World Bank, governs the distribution of water from the Indus River system between India and Pakistan. Islamabad has expressed alarm in recent months over what it sees as India's unilateral actions affecting river flows, warning that any withdrawal from or violation of the treaty could destabilize water access for millions of people in the region. Bhutto Zardari emphasized that Pakistan seeks engagement over confrontation with India, citing terrorism, the longstanding Kashmir territorial dispute, and water issues as areas that require dialogue. 'There should be engagement with India, whether on the issue of terrorism, the Kashmir dispute, or, of course, the critical issue of water, so that solutions can be found,' he said. Bhutto Zardari also thanked the European Union for expressing condolences over Pakistani casualties in the recent clashes with India and praised the bloc's commitment to international norms. 'If you look at this recent conflict, the violation of international law has been committed by one side, and that side is not Pakistan,' he said. Musadiq Malik, Pakistan's federal minister for water resources and another member of the delegation, warned EU officials of the wider implications of undermining water treaties. 'If India is given the right to exit the Indus Waters Treaty, then 70 percent of the world's countries that are lower riparian, whose populations depend on drinking water, agriculture, and life itself, will face destruction,' Malik said. He urged the international community to preserve a rules-based global order. 'Because if we do not, remember, in the Wild West, the one with the faster gun ruled,' he added. Former ambassador Jalil Abbas Jilani, also part of the delegation, said the team had requested continued EU support for Pakistan under the Generalized Scheme of Preferences Plus (GSP+), which allows duty-free or low-duty access for developing countries to the European market in exchange for progress on human rights, labor standards, environmental protection, and good governance. 'We requested them to continue their support for GSP+, as they have in the past,' Jilani said. 'We hope the European Union will take into consideration Pakistan's need for the GSP+ status and will play a role in its continuation.' The current GSP+ arrangement, which has significantly boosted Pakistan's textile exports to the EU, is due for review as the bloc finalizes the next phase of its trade preference program. The scheme has played a key role in supporting Pakistan's exports, particularly in the garment sector, which employs millions. Pakistan GSP+ benefits were extended last year until 2027.
Arab News
3 hours ago
- Arab News
Pakistan forms body to review e-commerce tax policy after new budget measures
ISLAMABAD: Pakistan's commerce and information technology ministries have announced the formation of a joint working group to propose changes to the country's e-commerce tax regime, following the introduction of new digital levies in the federal budget for fiscal year 2025–26. The budget, announced on June 10, imposes a tiered taxation structure on digital transactions. For payments under Rs10,000 ($35), a 1 percent tax will be applied. Payments between Rs10,000 and Rs20,000 ($71) will face a 2 percent tax, while transactions above Rs20,000 will be taxed at 0.25 percent. Courier services will collect the tax for cash-on-delivery orders, and payment gateways will deduct it for online payments. The measures have raised concerns among businesses about increased compliance burdens and costs for online consumers. 'In line with the consultative approach of the forthcoming policy, Minister Kamal Khan announced the formation of a joint working group with input from the IT Ministry to gather comprehensive recommendations on taxation, vendor compliance and digital payments,' the commerce ministry said in a statement after a meeting between Commerce Minister Jam Kamal Khan and IT Minister Shaza Fatima Khawaja. 'The group's findings will be formally presented to the prime minister for final consideration,' it added. 'Minister Kamal also confirmed that e-commerce policy 2.0 is in its final stages of internal review and will soon be submitted for cabinet approval.' Pakistan's e-commerce sector has grown rapidly, reaching a market value of Rs2.17 trillion ($7.7 billion) in 2024, according to the ministry of commerce. The sector is expected to expand at a compound annual growth rate of 17 percent through 2027, driven by increased smartphone penetration, digital payments, and logistics infrastructure. The new tax framework has triggered concern among industry stakeholders, particularly small and medium-sized enterprises (SMEs), which dominate Pakistan's online retail sector. Analysts say the measures could slow growth and hinder innovation in a sector seen as key to the country's digital transformation. In comparison, regional tax regimes vary. India applies a 1 percent Tax Collected at Source (TCS) on e-commerce sellers under its Goods and Services Tax (GST) framework, while Bangladesh introduced a 5 percent VAT on local digital services in 2022. Sri Lanka levies a 2.5 percent Value Added Tax on online purchases, with additional withholding tax for certain platforms. Globally, the European Union imposes VAT on cross-border e-commerce transactions, with rates ranging from 17 percent to 27 percent, while US states apply sales taxes ranging between 0 percent and 10.25 percent, depending on jurisdiction. Pakistan's e-commerce policy 2.0, once finalized, is expected to address regulatory gaps and streamline the digital business environment, which has so far operated under fragmented taxation and compliance rules.
