Pakistan has seen a substantial surge in workers’ remittances from the United Arab Emirates (UAE) in the first two months of the 2024-25 fiscal year, according to recent data released by the State Bank of Pakistan (SBP).
Workers from the UAE sent home a remarkable $1.15 billion between July and August 2024, marking an 84% increase compared to the $624 million sent during the same period in the previous fiscal year.
The significant rise in remittances from the UAE is a bright spot for Pakistan’s economy, which heavily relies on inflows of foreign currency from overseas workers. This growth comes amidst broader economic challenges in the country, with rising inflation and a depreciating local currency. The higher remittances have provided a much-needed cushion for Pakistan’s foreign exchange reserves, which have been under pressure in recent years.
The UAE, home to a large population of Pakistani expatriates, has consistently been one of the top sources of remittances for the country. However, this latest increase represents a notable acceleration in the amount being sent. Analysts attribute the surge to multiple factors, including improved global economic conditions, the appreciation of the dollar, and the growing use of formal channels to send money home, encouraged by government policies and improved banking regulations.
In addition to remittances from the UAE, Pakistan has also seen a 50% rise in remittances from Saudi Arabia during the same period. Pakistani workers in Saudi Arabia sent $1.47 billion back to their homeland in the first two months of the current fiscal year, compared to $978 million in the corresponding period last year. Saudi Arabia remains the largest source of remittances for Pakistan, and the increase reflects similar trends seen in the UAE, with many expatriates benefiting from steady economic conditions and robust job markets in the Gulf.
Meanwhile, remittances from other Gulf Cooperation Council (GCC) countries, including Bahrain, Kuwait, Qatar, and Oman, have also increased by 20% year-on-year. In total, Pakistan received $570 million from these countries during July and August 2024, compared to $473 million during the same period last year.
The rise in remittances has been partly driven by efforts from the Pakistani government to facilitate and encourage the use of formal banking channels for overseas workers to send their money back home. Initiatives such as reducing transaction costs and providing incentives to use legal channels have played a crucial role in this positive trend. The remittances are expected to remain strong in the coming months, providing essential support to Pakistan’s foreign exchange reserves and contributing to economic stability amidst ongoing financial challenges.
