Remittances sent by overseas Pakistanis have remained strong in the early months of FY26, even after the government reduced incentives for banks and exchange companies. According to the State Bank of Pakistan, total inflows during July and August rose by 7 percent compared to last year, easing concerns of a possible decline.
Inflows Remain Strong in August
In August, remittances reached $3.137 billion, reflecting a year-on-year growth of 6.6 percent. However, inflows showed a slight month-on-month decline of 2.4 percent compared to July, when $3.214 billion were recorded. Despite this dip, overall performance in the first two months of FY26 remains encouraging.
Analysts note that while the 7 percent growth is positive, it falls short of the extraordinary surge witnessed in FY25. During the same period last fiscal year, remittances jumped by 44 percent, helping Pakistan achieve a record $38.3 billion in annual inflows. This exceptional growth stabilized the exchange rate and allowed foreign exchange reserves to increase by $7.8 billion, reaching $14.5 billion.
FY26 Outlook for Remittances
The government does not expect FY26 remittances to match the record-breaking levels of FY25. However, it remains optimistic that inflows could reach around $40 billion by the end of the fiscal year. Experts stress that sustained remittance strength will be critical for maintaining a current account surplus and ensuring exchange rate stability.
Regional Breakdown of Remittance Trends
A closer look at country-wise remittance data reveals mixed trends. Inflows from the Middle East continue to dominate, accounting for about 55 percent of total inflows in the first two months of FY26.
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Saudi Arabia: Remittances totaled $1.56 billion, showing 6 percent growth. However, this is modest compared to the 50.7 percent rise seen in the same period last year.
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United Arab Emirates: Inflows increased by 13.8 percent to $1.308 billion, down sharply from the 84.3 percent growth recorded in early FY25.
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Other GCC countries: Remittances reached $600 million, marking a 5.3 percent increase.
In contrast, inflows from Western economies have shown weakness:
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United Kingdom: Remittances declined slightly by 0.5 percent to $913.7 million.
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United States: Inflows fell by 13.7 percent, dropping to $537 million.
On a positive note, the European Union emerged as a strong contributor, with inflows rising by 18 percent to $857 million during July-August FY26.
Importance of Sustaining Remittance Growth
Financial experts highlight the crucial role of remittances in Pakistan’s economic stability. Consistent inflows help bridge the current account gap, support foreign reserves, and strengthen confidence in the local currency. Policymakers are encouraged to maintain trust among overseas Pakistanis by ensuring transparency, efficient banking channels, and stable exchange rates.
Despite reduced incentives for financial institutions, Pakistan’s remittances have demonstrated resilience in FY26. With inflows growing steadily, particularly from Gulf countries and the European Union, the country remains hopeful of achieving close to $40 billion by year-end. However, the decline in contributions from the United States and United Kingdom signals the need for broader engagement with overseas communities across diverse regions.
