Remittances hit all-time July high of $3.2bn

KARACHI: Remittances from Pakistan’s overseas workers increased 7.4 per cent year-on-year (YoY) to $3.2 billion in July, the State Bank of Pakistan (SBP) said on Friday.

However, remittance inflows fell by 6.0 per cent compared to June 2025.Remittances in July reached $3.2 billion, marking the highest inflow ever recorded for this month in Pakistan’s history, wrote Arif Habib Limited in a brief note.

The latest remittance figures were released as the rupee stabilised at 282 per dollar in the interbank market. This stability follows the government’s crackdown on illegal dollar trade last month and the prime minister’s announcement that the Pakistan Remittance Initiative scheme will continue, along with maintaining remittance incentives for financial institutions.

“Last month remittances were higher due to higher inflows on the eve of Eidul Azha,” said Awais Ashraf, director of research at AKD Securities Limited.“Despite uncertainty over the continuation of the workers’ remittances subsidy, inflows remained strong in July due to a curb on illegal markets and higher emigration in the last three years,” Ashraf added.

Remittances, a crucial factor in stabilising the current account, were exceptional last year, showing significant growth with an increase of $8 billion as overseas Pakistanis sent money home through official channels, aided by government incentives and the support from the SBP.

According to the SBP’s monetary policy statement issued last month, workers’ remittances remained instrumental, as they more than offset the widening trade deficit. On the financing front, a sizable portion of planned official inflows materialised in June, propelling the SBP’s foreign exchange reserves beyond $14 billion.

Going forward, workers’ remittances are projected to grow at a slower pace amidst a high base effect and recent rationalisation of home remittances incentive schemes. The SBP expects remittances to rise to over $40 billion in FY26, compared to $38.3 billion a year before.

Meanwhile, the trade deficit is expected to widen due to increased import demand, in line with the improving domestic economic activity, slowdown in global demand, and unfavourable export prices, particularly of rice, the SBP said.

As a result, the current account deficit is projected in the range of zero to 1.0 per cent of GDP in FY26. On the financing side, inflows are likely to improve, partly due to higher expected private flows following the recent upgrade in the country’s credit rating. Based on this assessment, the SBP’s FX reserves are projected to rise to $15.5 billion by end-December 2025, it added.