Pakistan’s Remittance Per Expat Trails Region Despite $38B Inflows

Despite expectations of receiving $38 billion in remittances during the current fiscal year (FY25), Pakistan’s average remittance per expatriate remains one of the lowest compared to peer nations, highlighting deeper economic vulnerabilities.

According to the latest report from the Policy Research and Advisory Council (PRAC) titled “Strategic Management of Pakistan’s Forex Reserves: Boosting Exports and Investment Flows,” remittances have grown at a compound annual rate of 6.1% from 2013 to 2023.

However, “Pakistan’s per expatriate remittance of $2,529 in 2023 remained significantly lower than peer countries, $16,780 for the Philippines, $9,703 for Thailand, $5,914 for Mexico, $4,626 for China and $3,906 for India.”

This low average highlights inefficiencies in how remittance flows are mobilized and utilized across sectors.

Structural Challenges Undermine Forex Stability

The report identifies several systemic issues that continue to strain Pakistan’s foreign exchange reserves, including:

• Overdependence on textiles in the export sector
• Persistent trade imbalances
• Increasing imports of consumer goods
• A sharply depreciating rupee

These factors collectively contributed to a sharp fall in forex reserves, from $23.5 billion in 2016 to just $11.3 billion in 2023—barely enough to cover three weeks of imports.

Policy tools like the Roshan Digital Account (RDA) and Naya Pakistan Certificates (NPCs) have played a role in attracting remittances and investment.

However, their influence has remained “largely concentrated in sectors like real estate and has not significantly contributed to industrial or agricultural productivity,” the report notes.

Recommendations to Boost Economic Resilience

To enhance remittance utility and strengthen reserve management, PRAC has put forward a set of actionable reforms:

• Reduce remittance transfer fees to incentivize formal channels
• Adjust NPC yields in alignment with domestic interest rates
• Redirect RDA inflows to priority sectors like special economic zones (SEZs) and agro-processing industries
• Simplify regulations on corporate foreign currency accounts
• Adopt a managed-float or “peg-and-revalue” exchange rate regime linked to the Real Effective Exchange Rate (REER) to minimize volatility

While remittances offer some cushion, the report warns that they are “insufficient as a standalone buffer” against economic shocks such as oil price spikes and political instability. The inconsistent shift between fixed and floating exchange rate systems has further eroded economic predictability.

“The country has alternated between fixed and floating exchange rate systems, contributing to significant depreciation in recent years. This depreciation has exacerbated trade deficits, inflated import costs, and weakened economic stability,” the report states.