In a major boost to Pakistan’s fragile economy, remittances sent by overseas workers hit an unprece.dented high of $4.1 billion in March 2025, according to the State Bank of Pakistan (SBP). This represents a remarkable year-on-year growth of 37.4%, making March the first month in the country’s history where remittance inflows surpassed the $4 billion mark. The SBP further reported that total remittances for the first nine months of the current fiscal year (July 2024 to March 2025) reached $28 billion, a sharp increase of 33.2% compared to $21 billion during the same period last year.
The surge has been widely welcomed by the government and financial analysts as a sign of renewed confidence by overseas Pakistanis in the country’s economic policies. Finance Minister Muhammad Aurangzeb praised the development, stating, “This record inflow is a vote of confidence from our diaspora. It reflects both the economic recovery in host countries and the faith in our government’s digital and financial reforms.” He emphasized that higher remittance inflows would strengthen the rupee, help contain the current account deficit, and ease pressure on foreign reserves.
The four leading sources of remittances remained consistent: Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States. According to SBP data, Pakistani workers in Saudi Arabia sent over $1.1 billion in March alone, followed by $925 million from the UAE, $580 million from the UK, and $470 million from the US. The Middle East continues to serve as the largest hub for Pakistani expatriate labor, and the recent economic recovery in the Gulf region has been a key driver of these inflows.
Several underlying factors have contributed to the increase in remittances. One major reason is the expanded use of legal and digital transfer channels, encouraged by the State Bank and supported by commercial banks. The Roshan Digital Account (RDA) initiative has also played a central role, offering attractive returns and a wide range of financial products to non-resident Pakistanis. To date, over $7.5 billion has been deposited into RDAs, helping to finance government bonds, real estate purchases, and local investments.
Additionally, the rupee’s recent depreciation against the US dollar has made remitting funds more attractive for overseas workers, as recipients at home get more value in local currency. Analysts suggest that the seasonal bump ahead of Ramadan and Eid may have also pushed March’s figure higher, as Pakistani families often rely on additional funds during religious and festive periods.
The government’s incentive structure for remittance transfers has also shown results. Several state-backed programs now offer reward points, discounted transaction fees, and better exchange rates for formal remittance senders. SBP Governor Jameel Ahmad noted in a press briefing, “We are seeing the success of our shift towards digitized banking and transparency. Informal channels are shrinking, and our formal network is gaining ground.”
Beyond remittances, Pakistan’s broader economic performance in FY 2024-25 is beginning to show signs of stabilization. The country’s exports have also played a role in narrowing the trade deficit. Textile exports, which make up more than 55% of total exports, rebounded with a 9% increase in the last quarter, reaching $14.2 billion by March. The IT sector also saw robust growth, with IT exports hitting $2.5 billion in the same period—a 22% increase from last year. Rice and leather goods, long considered steady contributors, also posted marginal growth.
With the remittance and export sectors gaining momentum, the current account deficit for March narrowed to just $270 million, down from $654 million in February. Foreign exchange reserves have now crossed $10.1 billion, giving the SBP more room to intervene in currency markets if necessary.
However, economists caution that this trend must be sustained through long-term policy consistency and continued outreach to the Pakistani diaspora. Dr. Hafiz Pasha, a senior economist and former finance minister, remarked, “While this is a great achievement, we must not assume that high remittances are a substitute for real economic reform. We need to create a business-friendly environment at home to reduce dependency on external inflows.”
Still, the social and economic benefits of remittances are profound. In many parts of Pakistan, especially rural Punjab, Khyber Pakhtunkhwa, and interior Sindh, remittance income is used for household consumption, housing, education, and even entrepreneurship. According to the Pakistan Bureau of Statistics, nearly 12% of all rural households depend partially or fully on funds sent by a family member abroad.
Looking ahead, the government plans to launch a new campaign to expand remittance channels into emerging job markets, including Eastern Europe, Malaysia, and Central Asia, where Pakistani workers are increasingly finding opportunities. Efforts are also underway to sign labor agreements with Qatar and Oman for construction and hospitality sectors, expected to absorb thousands of skilled and semi-skilled workers.
As the fiscal year enters its final quarter, policymakers remain optimistic that total remittances could touch $36 billion by June 2025—an all-time high. If achieved, this will further stabilize Pakistan’s external sector and reduce the need for emergency foreign borrowing.
The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance.
