Remittance record

Pakistan rarely receives any good news on the economic front. But over the last couple of months, economic indicators have consistently pointed out that the country is on the right track. Last week, the country offered some good news for people interested in the state of the country's finances. Remittances soared to an all-time high of $8.8 billion in the first quarter of FY2025, a 38.8 per cent increase when compared to the same period last year. Experts have pinned this achievement to a stable rupee, a narrowing gap between open and market rates, and an increase in the number of workers relocating abroad. Remittances are a critical lifeline for thousands of low- and middle-income households in the country. They provide a decent living to hundreds of thousands of people, allowing the young to acquire an education and the elderly to cover their medical expenses without any worry. Previously, mainly due to high transaction costs, many people living abroad would try to evade formal channels as much as possible. It is impressive that the government has successfully gained people’s trust to some extent, convincing them to move to official channels. The State Bank of Pakistan (SBP) has also introduced new incentives to encourage exchange companies to increase the volume of transactions.

Remittances also play a crucial role in uplifting the country’s real-estate sector. People in the Middle East often see Pakistan as a prime location for their post-retirement life. And for governments here, it is critical to ensure that the Pakistani market maintains its charm for people overseas. It is also important for authorities to provide an alternative option to investment abroad. Currently, Roshan Digital Accounts (RDAs) and real estate offer good returns to people abroad. But there is an untapped sector that can thrive well if it gets exposed to uninterrupted funding. Startups in Pakistan have suffered a little over the last few years. Investment from people abroad could well provide the fuel the startup industry needs.

Amid all this, what the government should never forget is the people behind these remittances. According to SBP data, remittances from Saudi Arabia rose 42 per cent to $2.1 billion in July-September FY25. Pakistan received $1.7 billion from workers residing in the UAE in the first quarter of FY25, a 67 per cent increase from a year earlier. A majority of workers in these countries are labourers who work tirelessly to send some payments abroad. However, when it comes to any visa-related issues, they rarely receive any help from Pakistani authorities over there. Besides working towards making Pakistan an attractive destination for people, the government should also focus on assisting workers abroad, ensuring that they are not deported for mistakes that could easily be rectified. After almost two years, Pakistan’s economy has witnessed some stability. Only with the government’s continuous efforts can this trend go on for a long time, steering the country towards the prosperity it desperately needs.