Remittances have always been a vital source of foreign exchange for Pakistan, contributing significantly to the country’s economic stability. According to the latest data released by the State Bank of Pakistan, the total remittances received during July–November FY25 amounted to $14.77 billion, showcasing year-on-year growth of 34.6%. Despite this growth, Pakistan still lags far behind countries like India, which received $129 billion in remittances in 2024, emphasizing the need for targeted policies to tap into the potential of its diaspora.
Over the years, remittances to Pakistan have shown fluctuations due to varying global economic conditions, exchange rate volatility, and labor market dynamics in host countries. For FY24, total remittances stood at $30.54 billion, marking an improvement over the $27.7 billion recorded in FY23. The data highlights the significant role played by Gulf Cooperation Council (GCC) countries, with Saudi Arabia ($7.29 billion) and the UAE ($6.19 billion) as the largest contributors.
Comparatively, remittance inflows from developed nations such as the USA ($1.49 billion) and the UK ($1.62 billion) have been steadily rising. However, other regions like the EU, Malaysia, and Australia show lower contributions, highlighting untapped opportunities.
While Pakistan’s remittances are crucial, they pale in comparison to India’s staggering $129 billion in 2024. The reasons for India’s dominance include a larger and more diverse diaspora, strong institutional frameworks, and targeted government policies. India has successfully diversified its remittance sources, with contributions not only from GCC countries but also from high-income nations like the USA and Europe.
Furthermore, India’s digital infrastructure, like its Unified Payments Interface (UPI), has eased financial transactions, encouraging faster and more secure remittance flows. Pakistan, in contrast, faces challenges such as dependence on a few regions and informal money transfer channels like hawala.
Pakistan needs to enhance its capabilities to achieve sustainable growth in remittance inflows. The following steps are recommended:
1. Facilitate Legal Channels
(i) Streamline the process for sending remittances through legal banking channels by reducing transaction fees.
(ii) Promote digital payment platforms and mobile banking to ensure faster and more accessible transactions for workers abroad.
2. Expand Overseas Employment Opportunities
(i) Negotiate labor agreements with emerging markets such as Japan, South Korea, and EU countries.
(ii) Establish training centers to equip workers with skills required in high-demand industries, such as IT and healthcare.
3. Incentivize Investments by the Diaspora
(i) Introduce attractive saving schemes and bonds for overseas Pakistanis with competitive returns.
(ii) Simplify the process for expatriates to invest in real estate, startups, and other domestic sectors.
4. Promote Financial Literacy
(i) Launch campaigns to educate workers about the benefits of using formal remittance channels.
(ii) Collaborate with host countries to provide financial training programs for migrant workers.
5. Leverage Technology
(i) Adopt a nationwide digital platform similar to India’s UPI, enabling seamless remittance transfers.
(ii) Use artificial intelligence to predict remittance trends and design proactive policies.
The Way Forward
Pakistan’s economy is heavily reliant on remittances, but significant potential remains untapped. By focusing on diversifying remittance sources, enhancing the skill set of its workforce, and leveraging technology, Pakistan can follow India’s footsteps in making remittances a cornerstone of its economic growth.
Achieving these goals requires a concerted effort from policymakers, the banking sector, and international partners. With strategic interventions, Pakistan can unlock the full potential of its diaspora, ensuring a brighter and more stable economic future.
The author is a journalist affiliated with Business Recorder, a newspaper.
*The views and opinions expressed herein, and any references, are those of the author and do not necessarily reflect the editorial policy of the Centre for Development and Stability (CDS).
