It has been a good year for workers’ remittances in Pakistan, with the total reaching a record $41.6 billion in the outgoing fiscal year (FY26). This total was reportedly in line with government and SBP estimates and represents an 8.6 per cent increase over the previous fiscal. Saudi Arabia remained the largest source of remittances at $9.783 billion, followed by the UAE at $8.807 billion, the UK at $6.326 billion and European Union countries at $5.227 billion. Experts have highlighted the importance of remittances as a source of external resilience for Pakistan and this record performance comes as the country’s external sector shows signs of improvement, with officials expecting the current account balance to remain slightly in surplus for FY26. Worries expressed earlier this year that the war in the Middle East would lead to a drastic decline in remittances do not seem to have materialised and experts have pointed to continuous rupee appreciation and increased labour migration in recent years as supporting the surge in remittances. Measures taken by the government and SBP to reduce transaction costs and encourage remittance inflows through formal channels have also been highlighted.
Channelling such an important source of forex through formal channels is crucial to the nation’s overall economic stability, and if there is one thing this government has been good at, it is delivering economic stability. However, the question now is whether these remittance levels can be expected to continue and whether the country’s external account can and should remain so dependent on remittances. Some experts are sceptical, saying remittance growth is likely to taper off from the last three years’ growth rate as the government unwinds remittances and migrant outflows slow. While some disagree with this analysis and argue that the upward trend is likely to continue even with the removal of the government subsidy, one cannot help but question whether having remittances as the country’s largest source of foreign exchange should be a point of pride.
The context here is declining exports and foreign direct investment. When one takes this into account, the picture that emerges is of a nation whose workers are able and willing to generate great economic value abroad but somehow unable to produce competitive exports at home or attract investment. What is holding them back from doing so in Pakistan? There is also the important question of how this nation expects to ever get its export and investment numbers up to the levels they need to be if its best and brightest workers keep leaving? Who will make the world-beating exports? And why should companies invest here if our best have already left? Celebrating the remittance numbers for now is OK and one cannot doubt that the upsurge is helping keep the external account and the overall economy stable. In the long run, however, the government must seriously think about creating a more enabling environment for Pakistan’s workers in Pakistan.
