KARACHI: The bullish trend in remittances remained intact as Pakistan received $3.214 billion in July, marking a 7.4 per cent increase year-on-year — despite the government’s move to rationalise incentives offered to banks on inward remittances.

The strong inflow came amid concerns from commercial banks, which had protested the reduction in incentives. However, bankers dealing in foreign exchange said the cuts would not materially affect the flow of remittances, adding that banks still stand to make substantial profits. “Remittance flows are expected to continue at last year’s pace unless disrupted by unforeseen circumstances,” one banker said.

Pakistan received a record $38.3bn in remittances during FY25, reflecting a robust 27pc year-on-year increase. The inflows provided ample dollar liquidity to the market, with the State Bank of Pakistan (SBP) emerging as the largest buyer, reportedly purchasing around $9bn from the open market during the year.

SBP data showed that July’s inflow of $3.214bn was 5.6pc or $192m lower than the $3.406bn received in June. Despite this dip, market sentiment remained upbeat.

$3.2bn received in July; experts raise alarm as reliance on remittances grows

However, currency dealers and banks reported a shortage of dollars in the open market, even in the presence of high remittance inflows. While authorities have denied any such shortage, importers and the general public have reportedly struggled to access dollars with ease.

For FY26, the SBP has modestly raised the remittance target to $40bn, reflecting continued optimism about overseas inflows. The government and SBP remain confident that growth in remittances will sustain through the year.

Among source countries, the strongest growth was recorded from EU nations, with remittances surging 21pc to $424.4m in July. Saudi Arabia remained the largest contributor, sending $823.7m — up 8.4pc year-on-year. Other key inflows included $665m from the UAE, $450.4m from the UK, and $296m from other Gulf Cooperation Council countries.

Conversely, inflows from the United States declined by 10.2pc to $269.6m. Despite the encouraging figures, some economists remain concerned about Pakistan’s growing dependence on remittances. Independent analyst Atif Ahmed cautioned that relying heavily on workers’ remittances to shore up foreign exchange reserves is risky.

“Global dynamics are changing rapidly, especially amid shifting trade relationships and evolving US tariff policies. Remittance flows cannot be guaranteed in the long run,” he said, adding that the government’s failure to boost exports remains a structural weakness.

Published in Dawn, August 9th, 2025