Pakistan stands as the sixth-largest recipient of global remittances, with a remittances-to-GDP ratio of over 7 per cent. This translates to approximately $30.3 billion, making remittances the country’s second-largest source of income, trailing only exports, which contribute about 9pc to GDP.
Notably, Pakistan’s remittance-to-GDP ratio surpasses that of neighbouring countries like Bangladesh and India, where it stands at 5.3pc and 3.5pc, respectively.
This substantial inflow is crucial in supporting Pakistan’s balance of payments and providing essential financial support to millions of households, playing a pivotal role in maintaining living standards and facilitating access to education and healthcare.
As remittances consistently outpace other foreign investments, optimising this channel is essential to maintaining economic stability in the country.
The majority of Pakistan’s remittances come from the Arab region, with Saudi Arabia and the United Arab Emirates (UAE) being the largest contributors. In FY24, approximately 58.5pc of total inward remittances came from Saudi Arabia, the UAE, and other Gulf Cooperation Council countries, making the Arab-Pakistan corridor the largest for remittances into Pakistan.
However, a significant volume of remittances — estimated at over $6bn — flow through informal channels, often due to a more favourable exchange rate and simpler processes in the hawala-hundi system.
Formalising these remittances can play a crucial role in stimulating economic growth and resilience, as well as strengthening the financial sector and providing better protection for both senders and recipients. It........