Overseas Pakistanis send $41.6bn in FY26 as SBP ends incentive schemes

Overseas workers’ remittances to Pakistan increased by 9% to $41.6 billion during Jul-June FY26, up from $38.3 billion in the previous fiscal year.

During June, remittances stood at $3.475 billion, according to data from the State Bank of Pakistan (SBP) released on Thursday.

In terms of growth, remittances declined by 18% on a month-on-month basis but were up 2% on a year-on-year basis.

Analysts attributed the annual increase to a combination of structural and policy factors.

Saad Hanif, Head of Research at Ismail Iqbal Securities, said the growth was driven by the continued shift from informal to formal banking channels following exchange company reforms and the crackdown on hawala/hundi, a stable rupee near Rs278 per US dollar that removed the incentive to delay or divert transfers, and a larger remitter base resulting from elevated GCC-bound emigration over the past two years.

“The corridor data reflects this breadth, with UAE up 12%, EU up 15% and others up 20% year-on-year, while incentive schemes provided additional support through the year,” he told Business Recorder

Waqas Ghani, Head of Research at JS Global Capital, said structural support from higher overseas employment, continued migration toward formal banking channels, and stable exchange rate dynamics continued to underpin inflows throughout the year.

Meanwhile, Sana Tawfik, Head of Research at Arif Habib Limited, said exchange rate stability, a narrow gap between interbank and open market rates, and administrative measures against illegal money transfer channels encouraged remittances through formal banking channels. She added that the increasing number of Pakistani workers going abroad had also contributed to higher inflows.

Remittances play a significant role in supporting the country’s external account, stimulating economic activity, and supplementing the disposable incomes of remittance-dependent households.

“The record inflows remain the anchor of Pakistan’s external account, fully absorbing a trade deficit that widened 21.6% year-on-year to $39.5 billion and keeping the current account in surplus,” Hanif said.

“This allowed SBP reserves to rise to $18.4 billion from $13 billion a year earlier, despite heavy debt repayments, supporting rupee stability and building room for eventual monetary easing.”

Ghani echoed the view, saying remittances remain the cornerstone of Pakistan’s external account as trade pressures increase.

Hanif said SBP projects workers’ remittances at $44 billion in FY27, with key monitorables being the Gulf conflict’s impact on GCC labour markets and the withdrawal of remittance incentive schemes.

Earlier, SBP Governor Jameel Ahmad said the preliminary numbers suggested that the inflows of workers’ remittances would end up above $41.5 billion in FY26, higher than last year, despite the recent geopolitical crisis in the region.

Last week, SBP discontinued a government-backed incentive scheme that reimbursed banks for telegraphic transfer charges on workers’ remittances.

Similarly, SBP also decided to discontinue the Sohni Dharti Remittance Program (SDRP), ending the incentive scheme that rewarded overseas Pakistanis for sending remittances through formal banking channels.

Breakdown of remittances

Overseas Pakistanis in Saudi Arabia remitted the largest amount in June 2026, sending $830 million. The amount was up 1% compared to the $823 million sent by the expatriates in the same month last year. However, the amount was down by 19% compared to $1,025 million recorded in May 2026.

Inflows from the United Arab Emirates rose by 10% on a yearly basis, from $717 million in June 2025 to $792 million in June 2026. They decreased significantly by 21% on a monthly basis.

Remittances from the UK amounted to $515 million during June 2026, down by 20% compared to $645 million in May.

Overseas Pakistanis in the US sent $297 million in June, a monthly decrease of 15% from $349 million during May.

Meanwhile, remittances from European Union (EU) countries clocked in at $415 million in June, recording a decrease of 11% on a monthly basis from $466 million in May.