By Moaaz Manzoor

Overseas Pakistanis sent a record $33.9 billion in remittances during July-April FY2025-26, providing critical support to the country’s external account amid rising import costs and global economic uncertainty, according to the Ministry of Planning’s Monthly Development Update for May 2026.

The report stated that workers’ remittances increased 8.5 percent compared with the same period last year, continuing to play a central role in stabilizing Pakistan’s foreign exchange position.

The inflows helped offset pressure from a widening trade deficit and rising energy-related imports during the fiscal year.

According to the report, imports of goods and services increased 8.3 percent to $56.3 billion during July-March FY2025-26, driven partly by higher petroleum imports and stronger domestic demand for machinery and intermediate goods.

Exports of goods and services declined 1.2 percent to $30.6 billion during July-March FY2025-26 compared with $30.9 billion a year earlier.

Despite the pressure on exports, strong remittance inflows helped contain external-sector stress. The report indicated that remittance inflows remained one of the country’s strongest external buffers amid elevated geopolitical and commodity price risks.

Global oil prices surged during March and April 2026 following the escalation of conflict in the Middle East, increasing Pakistan’s import bill and external financing requirements.

The report noted that stable remittance inflows helped support foreign exchange reserves and exchange-rate stability despite rising external-sector pressures. Remittances remain a major source of household income and consumption support across Pakistan.

The report suggested that overseas inflows contributed to domestic demand, retail spending, and financial-sector liquidity during the fiscal year.

At the same time, the banking sector recorded expansion in private-sector credit and deposits amid improving economic conditions.

Credit to private businesses increased 12.7 percent to Rs10.79 trillion by April 24, 2026.

The report also highlighted improving macroeconomic conditions during FY2025-26 despite renewed inflationary pressures in recent months.

GDP growth accelerated to 3.8 percent during the first half of the fiscal year, while large-scale manufacturing expanded 6.5 percent during July-March FY2025-26.

However, inflation increased sharply to 10.9 percent in April 2026 because of higher fuel prices and energy costs triggered by global oil-market volatility.

The report stressed that sustaining external stability would require continued export growth, prudent fiscal management and stronger foreign investment inflows alongside remittance support.

The development outlook noted that external risks linked to geopolitical tensions, commodity-price volatility and global financial conditions could continue affecting Pakistan’s balance of payments during the remainder of FY2025-26.

Credit: INP-WealthPk