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KARACHI: The State Bank of Pakistan (SBP) has reported a strong rise in Pak remittances in May 2025, offering critical support to the country’s external account at a time when growing imports and falling exports are deepening the trade deficit.
According to SBP data, Pak remittances in May 2025 reached $3.7 billion, reflecting a 14% year-on-year increase. This positive trend has continued throughout FY2024-25, easing pressure on foreign exchange reserves and helping to stabilize the external sector.
Ali Najib, Deputy Head of Trading at Arif Habib Limited (AHL), noted a 16% month-on-month and 13.7% year-on-year increase in May inflows, highlighting the consistent confidence of overseas Pakistanis in formal remittance channels.
Cumulative remittances from July to May FY2025 totaled $34.9 billion — a notable 28.8% rise over the same period last year. The growth is attributed to better documentation, regulatory incentives, and seasonal Eid-related transfers.
Top remittance sources remained unchanged, with Saudi Arabia ($913.9M), the UAE ($754.2M), the UK ($588.1M), and the US leading. The UAE showed the highest increase, particularly from Dubai, which alone sent $567.2M. EU countries also contributed significantly, with Italy accounting for $118.2M.
Non-traditional markets are becoming more prominent, with notable year-on-year increases from South Africa (74%), Ireland (53.1%), and Malaysia (40.4%), reflecting a gradual diversification of the Pakistani diaspora.
Monthly remittance flows peaked in March 2025 at $4.05B, with a steady pace through May. The fiscal year’s average monthly remittance stands at $2.52B, marking a 10.7% rise over FY24.
Experts link this upward trend to strong economic conditions in host countries, a relatively stable exchange rate, and enhanced digital remittance platforms like Roshan Digital Account and SBP EasyData, which have improved trust and accessibility.
However, concerns remain over the long-term sustainability of this growth. A heavy reliance on traditional markets — contributing 61% of total inflows — leaves Pakistan vulnerable to changes in foreign labour policies or global economic slowdowns.
For instance, remittances from the US dropped 12.4% year-on-year in May, likely due to stricter regulations or shifting diaspora demographics.
High remittance costs, ranging between 5% and 7%, continue to push some users toward informal channels such as hawala. Exchange rate disparities between official and parallel markets also discourage use of formal avenues.
Analytical challenges persist due to limited reporting on remittance purposes and the inclusion of foreign currency account flows in headline figures. Structurally, most remitters are low-skilled workers — particularly in Gulf states — making flows susceptible to automation and wage stagnation, especially under Saudi Arabia’s Vision 2030 reforms.
Pakistan’s policies also fall short in channeling diaspora funds into high-value ventures like startups or bonds. Seasonal trends further add volatility, as evidenced by the 16% month-on-month increase in May due to Eid-related transfers.
To strengthen resilience, analysts suggest diversifying workforce destinations, lowering remittance costs via fintech, publishing detailed inflow data, and upskilling the labour force for opportunities in advanced economies.
Such reforms are vital if remittances are to remain a stable and significant contributor to Pakistan’s economy, currently accounting for 8-10% of GDP.
