Karachi – In a significant development revealed by central bank data on Friday, remittances sent by Pakistan’s overseas workers amounted to $3.2 billion in April. This figure represents a notable 22% drop when compared to the record – breaking $4.1 billion received in March. Despite this monthly decline, there is a silver lining as remittances in April still showed a 13% year – on – year increase. Over the span of 10 months through April, the cash sent home by Pakistanis living abroad surged by 31% to reach $31.2 billion compared to the same period last year.
The decrease in April’s remittance figures was in line with what analysts had predicted. Experts had anticipated that these inflows would dip before rising again in May and June. This pattern is largely due to the fact that overseas Pakistanis typically send larger sums of money home in the lead – up to the Eidul Azha festival, when the purchase of sacrificial animals is a major expense. Sana Tawfiq, the head of research at Arif Habib Limited, offered further insight into the situation. She explained that the monthly drop in remittances was a result of the conclusion of the seasonal factors associated with Ramazan and Eidul Fitr. However, Tawfiq also pointed out that the monthly average rate of remittances, which exceeds $3 billion, has remained relatively stable.
Remittances play a crucial role in Pakistan’s foreign exchange reserves. The increase observed over the 10 months of this fiscal year can be attributed to several factors. These include the government’s initiatives to promote the use of formal channels for remittance flows, the smooth functioning of the domestic currency market, the growing number of Pakistanis migrating abroad, and the economic recovery spurred by the International Monetary Fund’s (IMF) loan programme. The State Bank of Pakistan (SBP) has optimistic forecasts for the country’s economic future. It predicts that the current account will remain in surplus throughout the fiscal year 2025 (FY25). With anticipated official inflows, especially those related to the IMF, the SBP expects its foreign exchange reserves to climb to $14 billion by June 2025. Additionally, remittance flows for the entire FY25 are projected to reach around $38 billion.
Pakistan is currently seeking a $1 billion loan tranche from the IMF as part of its $7 billion bailout programme, with an executive board meeting to review the loan originally scheduled for May 9. However, the country faces significant challenges on the economic front. The uncertain global economic and trade environment, worsened by steep US tariffs and the ongoing conflict with India, could have a negative impact on Pakistan’s economy. Tensions between the two nuclear – armed neighbours have escalated following a series of retaliatory attacks after a militant incident in occupied Kashmir last month. Both countries have accused each other of launching drone and artillery strikes, adding to the instability and potential economic risks.
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