Rate of Remittance Inflows By Overseas Pakistan Lowest in the Region: Report

Pakistan is projected to receive $38 billion in remittances during the current fiscal year (FY25), yet its per expatriate remittance remains the lowest among peer countries, according to a report by the Policy Research and Advisory Council (PRAC). Remittances grew at a compound annual rate of 6.1 percent from 2013 to 2023, but the average remittance per expatriate stood at just $2,529 in 2023. This is significantly lower compared to the Philippines ($16,780), Thailand ($9,703), Mexico ($5,914), China ($4,626), and India ($3,906). PRAC attributed this to structural weaknesses like the narrow export base in textiles, persistent trade deficits, rising consumer imports, and a below-par rupee. These factors have contributed to the volatility of Pakistan’s foreign exchange reserves, which fell sharply from $23.5 billion in 2016 to $11.3 billion in 2023. To improve remittance effectiveness and forex stability, PRAC recommended lowering remittance transfer costs, adjusting NPC yields in line with domestic interest rates, and channeling RDA inflows to special economic zones and agro-processing sectors. The council also urged a shift to an exchange rate system anchored to the Real Effective Exchange Rate (REER) to reduce volatility. The report concluded that remittances are insufficient on their own. A more resilient and targeted foreign exchange strategy is essential to shield the economy from external shocks like global oil price fluctuations and political turmoil.