Islamabad – Pakistan’s foreign exchange reserves received a boost in January, with workers’ remittances totaling $3.5 billion, a 15.4% increase year-on-year, according to data released Tuesday by the State Bank of Pakistan (SBP).
The inflows represent a critical source of foreign currency for the South Asian nation, currently navigating a challenging economic landscape. Cumulatively, remittances reached $23.2 billion during the first seven months of the fiscal year 2025-26 (July-January), up 11.3% from $20.9 billion during the same period last year, the SBP reported.
Saudi Arabia remained the largest contributor to remittance inflows in January, sending $739.6 million. The United Arab Emirates followed with $694.2 million, even as the United Kingdom and the United States contributed $572.1 million and $294.7 million respectively.
The January figure builds on a trend of strong remittance flows, with December 2025 recording the highest inflows of the fiscal year at $3.6 billion. The SBP attributed this sustained growth to incentives promoting formal remittance channels and relative stability in the Pakistani rupee’s exchange rate.
However, currency experts caution that the pace of growth in fiscal year 2026 is slower than the substantial 26% surge recorded in fiscal year 2025, when remittances totaled a record $38.3 billion. Some analysts suggest a “managed” exchange rate – a policy of intervention to maintain a specific exchange rate level – may be diverting funds away from official banking channels and into the informal market, limiting the reported increase.
Pakistan consistently ranks among the top global recipients of remittances. Last year’s record inflows provided crucial support, helping to partially repay external debt, bolster SBP reserves, and stabilize the exchange rate, ultimately contributing to a current account surplus – the first in over a decade.
The SBP Governor, Jameel Ahmad, recently revised the full fiscal year 2025-26 remittance forecast upwards to $42 billion, anticipating further increases ahead of the Eid-Ul-Fitr and Eid-Ul-Adha holidays in March-June 2026, periods historically marked by higher inflows as overseas Pakistanis send money to family. Tresmark reported on this revised forecast on February 9, 2026.
While the government views remittances as vital for maintaining external balance, some economists express concern over the increasing number of Pakistanis seeking employment abroad, framing it as a potential “brain drain.” The SBP is also nearing completion of integration with Buna, a cross-border payment system in multiple currencies operated in the Arab world, which is expected to expedite remittance transfers from the region. Discussions are also underway with Saudi Arabia and the UAE to integrate Pakistan’s digital payment system with those countries, potentially further improving remittance flows.
The central bank has not yet commented on the potential impact of geopolitical events or global economic shifts on future remittance trends.
