Despite a 13% annual rise, remittances fell 22% month-on-month in April, highlighting volatility and external risks amid Pakistan’s economic recovery efforts.
Key Takeaways:
• Pakistan’s remittances fell 22% month-on-month in April 2025 but rose 13.1% year-on-year, totaling $3.2 billion.
• A potential current account deficit of $350-$400 million for April is linked to high import bills and remittance volatility.
• Experts urge diversification of remittance sources and sustained policy support to maintain external sector stability.
Islamabad, Pakistan – Pakistan’s vital inflows of workers’ remittances, which have been a key pillar supporting the country’s external financing and macroeconomic stability, experienced a sharp slowdown in April 2025. According to the latest data released by the State Bank of Pakistan (SBP), remittances totaled $3.2 billion in April, marking a 13.1% increase year-on-year but a significant 22% decline compared to the record $4.1 billion received in March.
This month-on-month dip has triggered concerns about a potential current account deficit estimated between $350 million and $400 million for April, as Pakistan faces a hefty $5.5 billion import bill. Analysts emphasize that the decline largely reflects the fading of seasonal factors, such as the surge in remittances during Ramzan and Eid, which traditionally boost transfers temporarily.
Despite this short-term setback, cumulative remittance inflows for the first ten months of fiscal year 2025 have reached $31.2 billion, a robust 30.9% increase from $23.9 billion in the same period last year. Key contributors to April’s inflows included Saudi Arabia ($725.4 million), the UAE ($657.6 million), the UK ($535.3 million), and the US ($302.4 million), underscoring the continued reliance on these major diaspora hubs.
However, challenges persist. The remittance growth depends heavily on labour migration to Gulf Cooperation Council (GCC) countries, especially Saudi Arabia and the UAE. While regulatory reforms and digital banking expansion have improved formal remittance channels, evolving visa policies and economic fluctuations in the Gulf region pose medium-term risks. Ali Najib of Insight Securities urged the government to diversify remittance sources to mitigate these vulnerabilities.
Additionally, the volatility of monthly remittance flows and underperformance from certain countries such as Bahrain, Kuwait, Japan, and Canada highlight the precarious nature of Pakistan’s external earnings. The country’s dependence on a few key remittance sources also increases exposure to external shocks.
Overall, while the remittance boom of March has faded, the underlying trend remains positive and crucial for Pakistan’s economic stability. Policymakers are encouraged to sustain currency stability, enhance labour market access abroad, and broaden the diaspora engagement to secure this vital foreign exchange lifeline.
Overall, while the remittance boom of March has faded, the underlying trend remains positive and crucial for Pakistan’s economic stability. Policymakers are encouraged to sustain currency stability, enhance labour market access abroad, and broaden the diaspora engagement to secure this vital foreign exchange lifeline.
