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Indo-Pak tensions: overseas Pakistanis can mobilise $1bn monthly in emergencies, ECAP

Overseas Pakistanis have the capacity to provide up to $1 billion a month in emergency financing to Pakistan through exchange companies, offering a critical financial cushion in times of national crisis, said Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP). Speaking at the Karachi Press Club on Wednesday, Bostan said the association has a swap system in place that allows the Pakistani diaspora to lend funds for a period of two years, with full repayment guaranteed by the government. 'We have a backup system ready to mobilize $1 billion a month, or $12 billion annually, from overseas Pakistanis if needed,' he told reporters. His statement comes at a time when nuclear-armed neighbours Pakistan and India are engaged in escalating skirmishes, with recent Indian attacks reportedly killing 26 and injuring 45 civilians across multiple locations. The chance of further escalation remains high, heightening concerns over regional stability and the country's economic resilience. Bostan recalled that a similar mechanism had helped Pakistan weather a severe financial crunch in 1994 when foreign exchange reserves had dropped to just $400 million. 'At that time, the exchange companies arranged $10 billion through the same swap system,' he said. He noted that he had offered to activate this financing channel again in early 2023, when Pakistan's reserves had dwindled to below $3 billion—barely enough to cover a month's imports. However, the then-government instead opted for a $3 billion short-term loan from the International Monetary Fund (IMF) in June 2023, followed by a long-term $7 billion facility signed in mid-2024. According to Bostan, around 15 million Pakistanis live abroad and collectively earn about $8 billion a month. 'They already send around $4 billion monthly as workers' remittances. The remaining $4 billion is retained overseas, which shows they have the potential to contribute even more if necessary,' he explained. In March 2025, workers' remittances hit a record high of $4.1 billion, bringing the total to $28 billion in the first nine months of FY24-25. Bostan said this figure could rise further if the government offers attractive investment options and instills greater confidence among expatriates. Despite recent tensions with India and a brief suspension of international flights, the rupee remained stable at around Rs281 against the US dollar in the interbank market, Bostan added. He said that currency dealers sold $10 million in the interbank market on Wednesday morning due to low demand for foreign currencies in the open market. He expected dollar inflows to pick up with the resumption of flights, as overseas Pakistanis returning home typically bring in foreign exchange. 'Exchange companies surrender $20–25 million daily to the interbank market, totaling around $425–450 million a month,' he noted. Bostan emphasized that overseas Pakistanis are not just a source of remittances but a financial lifeline in difficult times, urging the government to strengthen ties with the diaspora to ensure their potential can be fully leveraged during national emergencies. Tensions between Pakistan and India escalated sharply following a deadly April 22 attack in Pahalgam, Occupied Kashmir, which killed 26 people, most of them tourists. India blamed the assault on cross-border elements without offering evidence, a claim Pakistan strongly rejected, calling instead for an independent investigation. In the days since, both countries moved into a state of heightened alert. Pakistan reinforced its military presence along the border, anticipating a possible incursion. Meanwhile, the Indian leadership granted its armed forces 'operational freedom,' further inflaming fears of escalation. Despite backchannel diplomatic efforts to contain the fallout, tensions remained high.