By Staff Reporter
KARACHI: Pakistan received a record $4.3 billion in workers’ remittances in May, the State Bank of Pakistan said Wednesday, driven by surging inflows from the Gulf states and the United Kingdom that have put the country on course for an unprecedented full-year total as it navigates a delicate IMF-backed stabilization program.
The monthly figure, the highest since Pakistan began tracking the data, surpassed the previous month by 20.2% and was 15.4% above the level recorded in May 2025, the central bank said. The surge was partly seasonal — remittances typically swell around the Eid holidays — but analysts said the underlying trend reflected deeper structural shifts in how Pakistani migrants move money home.
“This improvement continues to reflect structural factors like higher emigration volumes, a sustained shift from hawala to formal banking channels, and relatively stable foreign exchange spreads in the interbank market,” said Waqas Ghani, head of research at JS Global. “Regional geopolitical developments appear to have further accelerated remittance flows.”
Saudi Arabia remained the largest single source of inflows, with Pakistani expatriates there sending $1.025 billion in May, up 22% from April and 12% higher than the same month a year earlier. The United Arab Emirates followed closely at $1.007 billion — a 37% jump month-on-month and a 33% rise year-on-year — while the United Kingdom contributed $645.5 million, up 15% from April. Pakistani workers in the United States sent $349.8 million, a 10% monthly increase, and inflows from European Union countries reached $466 million.
Together, Saudi Arabia and the UAE accounted for more than $2 billion of May’s total, underscoring how heavily Pakistan’s hard-currency liquidity is concentrated in a single geopolitical corridor at a time of elevated Middle East tensions. A prolonged regional conflict, or any disruption to migrant labor markets in the Gulf, could materially alter the trajectory of inflows that now effectively finance a significant portion of Pakistan’s trade deficit.
Cumulative remittances for the first eleven months of fiscal year 2025-26 reached $38.1 billion, up 9.2% from $34.9 billion in the year-earlier period, the SBP said. The monthly average run-rate has risen to $3.5 billion in the current fiscal year from $3.2 billion in the prior year, a 9% improvement, according to Ghani.
Khurram Schehzad, an adviser to the finance minister, said the country had recorded its “highest-ever monthly remittance inflow in history” and predicted full-year flows would “exceed well beyond $41 billion for the first time ever.” With one month remaining in the fiscal year, brokers at Topline Securities said they expected FY26 remittances to come in slightly above their $41 billion forecast.
The record inflow arrives at a critical moment for Islamabad. The government is in the midst of a $7 billion IMF program that requires it to maintain external stability, rebuild foreign exchange reserves and keep the current account in check. Remittances, which constitute roughly 9% to 10% of GDP, represent one of the few large and relatively dependable sources of foreign currency available to Pakistani policymakers, helping offset the trade deficit and support the rupee without adding to the country’s external debt burden.
Yet not all analysts are sanguine. Currency market participants have flagged concerns that Pakistan’s managed exchange rate may be creating a spread between official and unofficial rates that is diverting some inflows away from formal banking channels and into the hawala network, complicating the picture. The result, they argue, is that officially recorded remittance growth — at 9.2% in cumulative terms — is softer than the 27% expansion seen in FY25, even as the government touts record monthly figures.
The dilemma is not new. Pakistan has long wrestled with the tension between exchange rate management and the incentive to remit through official channels. A wider spread between the interbank and open-market rates historically pushes diaspora senders toward informal money transfer operators that offer better conversion terms, reducing the foreign currency that flows through the banking system and ultimately into reserves.
For now, the official numbers continue to break records. The government has promoted formal remittance channels through tax incentives and banking infrastructure, and the SBP points to the Roshan Digital Account program as one mechanism that has helped capture diaspora savings.
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