Karachi: The influx of remittances into Pakistan is reaching unprecedented levels, with exchange companies projecting an impressive $5 billion in remittances by the end of Ramazan. This surge in financial inflows underscores the growing importance of overseas Pakistanis in supporting the country’s economy, as remittances continue to outpace export earnings.
According to Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan, exchange companies have already sold between $3.5 billion and $4 billion to local banks during the first eight months of the fiscal year 2025 (FY25). Paracha expressed confidence that the ongoing remittance influx during the holy month of Ramazan would push the total remittances handled by exchange companies to $5 billion by the close of the month, marking a significant achievement for the sector.
“By the end of Ramazan, we are confident we will sell $5 billion to the banks, which will be a great accomplishment for us,” Paracha said in a statement on Saturday. The growth in remittances is part of a broader trend in FY25, with Pakistan receiving $20.9 billion in remittances from July to January of FY25—an increase of 32.27% compared to the same period in the previous fiscal year. This growth has already surpassed the $5 billion target set for the entire fiscal year, indicating the continued strength of remittance flows into Pakistan.
Exchange companies have long advocated for the government to focus on facilitating overseas Pakistanis in order to boost remittance inflows. Paracha noted that the government’s focus on providing subsidies to exporters has not resulted in significant growth, while remittance inflows have already outpaced the proceeds from exports. “We are certain that with more incentives and policy changes, remittances could double,” he added, underscoring the potential for further growth in this critical sector.
There has been growing concern among some market experts regarding the government’s reliance on the International Monetary Fund (IMF) for a bailout package of $7 billion. With the IMF conducting a forensic audit of Pakistan’s economy, many are questioning the wisdom of prioritizing external loans over the support of Pakistanis abroad, who contribute a much larger sum to the economy annually.
A market expert, speaking anonymously, pointed out that while the IMF’s contribution of $7 billion over 37 months is significant, the $35 billion sent home by overseas Pakistanis in a single year represents a far more crucial financial lifeline for the country. “These Pakistanis should receive more attention and care than the IMF,” the expert remarked, echoing sentiments held by exchange company owners who advocate for greater attention to remittances.
The robust remittance inflows have played a crucial role in stabilizing the exchange rate and helping the State Bank of Pakistan (SBP) maintain foreign exchange reserves. In the first four months of FY25, the SBP purchased approximately $3.8 billion from the interbank market to bolster its reserves. These efforts have contributed to currency stabilization, which has been essential for the country’s economic stability.
Paracha also highlighted that the average monthly inflows through exchange companies during the first eight months of FY25 ranged from $400 million to $450 million. One of the primary drivers of these higher remittance levels is the government’s crackdown on illegal currency businesses, which has resulted in reduced money laundering activities and a more secure and transparent financial system, according to a currency expert.
In summary, exchange companies in Pakistan are on track to achieve a milestone of $5 billion in remittance inflows by the end of Ramazan, driven by both increased contributions from overseas Pakistanis and enhanced government efforts to reduce illicit financial activities. As remittances continue to play a pivotal role in Pakistan’s economic stability, the sector remains optimistic about future growth, particularly if further policy reforms are implemented to support this critical source of revenue.