By Moaaz Manzoor

Workers’ remittances to Pakistan increased by 11.3 percent to $23.2 billion during July–January FY2025-26, providing important support to the country’s external sector, according to the Monthly Development Update released by the Ministry of Planning, Development and Special Initiatives.

The report notes that remittance inflows remained a key pillar supporting Pakistan’s external sector during the fiscal year as economic activity gradually strengthened.

According to the update, remittances during July–January FY2025-26 reached $23.2 billion, up from $20.9 billion in the same period of the previous fiscal year, reflecting a steady increase in inflows from overseas Pakistanis.

The report attributes the growth in remittances to several factors, including policy measures introduced by the government and developments in overseas labor markets.

One of the key factors highlighted in the report is the narrowing gap between open market and interbank exchange rates, which encouraged the use of formal channels for remittance transfers.

The update also notes that the increase in the migration of Pakistani workers abroad contributed to higher remittance inflows during the fiscal year, as more workers sought employment opportunities overseas.

In addition, positive economic conditions in host countries supported stronger remittance flows, allowing overseas Pakistanis to send higher transfers back home during the review period.

The report identifies remittances as an important source of foreign exchange that helps support Pakistan’s external sector, particularly during periods when import demand increases alongside recovering economic activity.

Alongside rising remittances, the report highlights several other developments in Pakistan’s external sector. Merchandise exports reached $18.3 billion during July–January FY2025-26, supported by the resilience of textile exports.

At the same time, imports increased to $36.7 billion, reflecting higher demand for capital, intermediate and consumer goods as economic activity improved.

The report also noted strong growth in services exports, which increased by 18.8 percent to reach $5.7 billion during July–January FY2025-26, led by growth in ICT exports.

Overall, the Planning Ministry’s update indicates that remittances continued to play a crucial role in supporting Pakistan’s external sector, helping offset pressures from rising imports and strengthening economic activity during the fiscal year.

Credit: INP-WealthPk