Pakistan’s remittance inflows reached $3.1 billion in December 2024, recording a significant 29.3% year-on-year increase, according to the State Bank of Pakistan (SBP). This remittance growth, a critical lifeline for the country, reflects a strengthening economy backed by reforms and the consistent support of overseas Pakistanis.
Impressive Half-Year Growth
In the first half of fiscal year 2024-25 (July-December), total remittances amounted to $17.8 billion, up by 32.8% from $13.4 billion in the same period last year. December also saw a 5.6% rise in remittances compared to November, further underscoring a positive trend.
Key Drivers of Growth
Experts attribute this surge to multiple factors, including economic recovery supported by International Monetary Fund (IMF) programs, a stable currency, and reforms targeting illegal foreign exchange activities. Incentives offered to banks and money transfer operators, along with enhanced digital payment infrastructure, have also encouraged formal remittance channels.
Former Finance Ministry Advisor Dr. Khaqan Najeeb noted that reduced differences between interbank and open market exchange rates and higher earnings of overseas workers in key destinations contributed to this rise. Additionally, inflationary pressures within Pakistan have increased the need for financial support from abroad, further boosting inflows.
Top Sources of Remittances
The largest share of remittances in December came from Saudi Arabia ($770.6 million), followed by the United Arab Emirates ($631.5 million), the United Kingdom ($456.9 million), and the United States ($284.3 million). Other significant contributors included Oman ($108.5 million), Qatar ($89.2 million), Kuwait ($71.1 million), and Bahrain ($41.2 million).
Significance of Remittance Inflows
Remittances remain a critical source of external financing for Pakistan, helping to bolster foreign exchange reserves and maintain a stable balance of payments. They also play a crucial role in meeting domestic financial needs, especially during periods of high inflation.
Prime Minister Shehbaz Sharif praised overseas Pakistanis for their unwavering commitment to the country’s progress. He emphasized that the record-breaking remittance inflows signify renewed economic stability and growth potential. The government expects these inflows to reach a historic $35 billion by the end of FY25.
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Path to Economic Growth
With improved economic indicators, Pakistan is gradually transitioning from stabilization to growth. The government remains focused on promoting public welfare and national development, while measures to support remittance inflows are expected to further strengthen the economy.
This steady increase in remittances highlights the critical role of the Pakistani diaspora in driving the nation’s economic recovery and underscores the potential for sustained growth in the coming years.
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