Remittances rise 11.9% to $3.42b | The Express Tribune

KARACHI:

Overseas Pakistanis sent home $3.42 billion in October 2025, marking an 11.9% year-on-year increase, offering some relief to Pakistan’s fragile external account at a time when the trade deficit has ballooned to $12.6 billion, driven by a surge in imports.

This rise reflects continued momentum in remittance inflows amid seasonal factors and stronger receipts from key host countries, including Saudi Arabia, the United Kingdom and the United Arab Emirates.

Cumulative remittances for the first four months (July-October FY26) reached $12.96 billion, up 9.3% compared to $11.85 billion in the same period last year, showing sustained support to Pakistan’s external account despite global economic headwinds, according to provisional data released by the State Bank of Pakistan (SBP).

Saudi Arabia remained the largest source, contributing $820.9 million in October, a 9.3% monthly increase and 7.1% higher year-on-year. Inflows from the UAE followed at $697.7 million, rising 15% from the same month last year, whilst the UK contributed $487.7 million, reflecting a 4.7% YoY growth.

Remittances from the United States moderated to $290 million, showing a decline of 8.8% year-on-year, whilst the European Union countries collectively sent $457.4 million, up a sharp 19.7% from October 2024.

Among GCC nations, other Gulf countries — including Qatar, Oman, Bahrain and Kuwait — posted combined inflows of $342.2 million, showing 5.1% growth.

On a cumulative basis, Saudi Arabia ($3.13 billion), UAE ($2.68 billion) and UK ($1.86 billion) remained the top three contributors during July-October FY26, collectively accounting for over half of total remittances.

The monthly average inflow during FY26 so far stood at $3.19 billion, compared to $2.52 billion in the corresponding period last year, reflecting a 26.6% overall improvement.

Analysts attribute the stability in remittance inflows to continued use of formal banking channels and digital platforms, including Roshan Digital Accounts, and efforts to curb informal transfers.

Pakistan’s trade deficit widened sharply to $12.6 billion during the first four months (July-October) of FY2025-26, adding $3.5 billion to the gap recorded in the same period last year, as imports surged to their highest level in more than three and a half years, according to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.

Imports in October alone amounted to $6.1 billion, the highest since March 2022 —a period that preceded Pakistan’s most severe balance-of-payments crisis in recent history. The sharp rise in imports has renewed fears of external sector pressure, even as the country remains under an International Monetary Fund (IMF) stabilisation programme.

During July-October, total imports rose to $23 billion, up 15.1% year-on-year, whilst exports slipped 4% to $10.5 billion. This means imports were more than double the country’s export earnings, highlighting persistent weaknesses in the trade structure. The resulting $12.6 billion deficit is 38% higher than the same period last fiscal year.

The additional $3.5 billion trade gap in just four months equals half the size of the IMF loan Pakistan expects to receive over three years under its new Extended Fund Facility. The widening deficit suggests that the recent surge in imports could offset the benefits of remittance growth and foreign inflows that had earlier stabilised the external account.

One major factor behind the import spike was the lowering of customs duties in the federal budget. The Federal Board of Revenue (FBR) reported a 43% increase in imports of non-dutiable goods during the first quarter compared to the same period last year. The reduction in duties is part of a broader trade liberalisation plan jointly implemented by the government, the World Bank and the IMF, aimed at improving long-term competitiveness by dismantling trade barriers.

However, experts have warned that the policy’s benefits may take time to materialise. A World Bank trade specialist said last month that “the three-month period is too short to judge the impact of liberalisation,” adding that sustained export growth is critical for stability.

In October 2025, exports fell to $2.8 billion, down 4.5% or $133 million from the same month last year —marking the third consecutive monthly decline. Meanwhile, imports climbed over 20% year-on-year, crossing the $6 billion mark for the first time since March 2022. This drove the monthly trade deficit to $3.2 billion, up 56% from October 2024.

Although the trade gap narrowed 4.2% month-on-month, the $141 million improvement did little to alter the broader trend. The government now faces a difficult balancing act: fulfilling IMF conditions to cut import taxes by 52% over five years, whilst preventing further strain on the balance of payments.