Remittances hit record $38.3b

Express Tribune

10-07-2025

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Pakistan's worker remittances dropped 8% month-on-month (MoM) to $3.41 billion in June 2025, marking the end of a robust fiscal year. Despite the monthly dip, remittances for FY25 surged 27% year-on-year (YoY), reaching an all-time high of $38.3 billion.
It comes in the wake of political and economic turmoil, which has forced a significant number of people to pursue migration. During June 2025, remittances amounted to $3.4 billion, up 8% from $3.2 billion in June 2024. However, inflows were down 8% MoM compared to $3.7 billion in May 2025, reflecting a typical post-Eid moderation.
The sharp rise reflects multiple contributing factors, noted Arif Habib Limited Deputy Head of Trading Ali Najib. "Firstly, improved global economic conditions in key host countries, particularly in the Gulf region, supported higher income levels for overseas Pakistanis," he said.
Secondly, there was formalisation of remittance channels, aided by the State Bank of Pakistan's (SBP) incentives under the Pakistan Remittance Initiative (PRI), and reduced reliance on informal means such as Hundi/Hawala, he added.
Moreover, the relative stability of the rupee and tighter regulation of foreign exchange markets made formal transfers more attractive. The increase also signals rising confidence in Pakistan's banking system and a shift towards documented financial flows. The surge has positively impacted the country's current account position, supported foreign exchange reserves and provided crucial support to households dependent on remittances, thereby playing a significant role in stabilising macroeconomic fundamentals. "For FY26, $39.3 billion (around 3% YoY growth) is anticipated," said Najib.
The annual surge was driven by higher inflows from traditional corridors such as Saudi Arabia ($9.3 billion, up 26%), the UAE ($7.8 billion, up 41%) and the UK ($5.9 billion, up 31%), as well as significant growth from EU countries ($4.5 billion, up 29%). Despite a 13% YoY decline in remittances from the United States, strong growth from the Gulf and Europe more than offset the shortfall.
The robust rise in remittances played a key role in strengthening Pakistan's external account during FY25, supported by policy efforts to encourage the use of formal channels and digital banking platforms such as Roshan Digital Accounts.
Pakistan is now one of the top five countries receiving the most remittances. Bangladesh also saw record inflows of $30 billion, up 26%, said Topline Securities CEO Mohammed Sohail. "They are a big source of support for both economies, helping bridge external gaps and boosting household incomes."
However, the latest data for June 2025 reveals several emerging challenges. One of the most notable concerns is the MoM decline of 7.6% as remittances dropped to $3.406 billion in June from $3.686 billion in May. This drop, occurring right after Eidul Azha, points to a pattern of volatility that continues to affect the stability of inflows. Although fiscal year 2025 ended with a record $38.3 billion, monthly dips signal that Pakistan's remittances remain highly seasonal and potentially vulnerable to external shocks.
Country-wise data further highlights key risks. Remittances from the US declined 10.5% MoM and 12.7% YoY, indicating a significant downturn in inflows from a major contributor. Similarly, the United Kingdom and the UAE reported monthly declines of 8.6% and 4.9%, respectively. This is concerning given that these three countries, along with Saudi Arabia, account for nearly 70% of total remittances. Such concentration poses a serious risk – any geopolitical, economic or regulatory changes in these countries could disproportionately impact Pakistan's external financing position.
Additionally, remittances from the Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, saw a steep 16.1% MoM decline. While these countries posted overall growth for FY25, their dependence on oil revenues and increasingly localised labour policies could create future uncertainties for Pakistani workers. The decline in flows from developed countries like Japan (-30.4% YoY), Canada (-8.6% YoY) and Norway (-4.3% YoY) also points to stagnation in these corridors, possibly due to integration challenges, inflationary pressures or reduced remitter incomes.
Moreover, inflows from "other countries", which include less traditional destinations, fell 9% MoM in June, suggesting under-diversified diaspora engagement. Another structural issue is the country's reliance on seasonal inflows, particularly during Ramazan and Eid months. For example, March to May 2025 saw a surge, peaking at $4.1 billion, but the subsequent drop in June reflects over-dependence on religious occasions to drive remittances. Experts suggest that to ensure stable inflows, Pakistan must diversify remittance sources, boost skilled labour exports and strengthen incentives for formal channels.