KARACHI: Overseas Pakistanis sent a record $38.3 billion in remittances during FY25, surpassing the upwardly revised target of $38bn and posting a robust growth of 26.6 per cent over the previous fiscal year, accordingto datareleased by the State Bank of Pakistan (SBP) on Wednesday.

In June alone, remittancesreached $3.4bn, marking a 7.9pc increase compared to the same month last year. The strong inflows provided critical supporttothe externalaccountata time when export growth remained subdued.

FY25 proved to be a relatively successful year for the government on the external front, with expectations of a current account surplus and the SBP exceeding its foreign exchange reserves target of $14bn by closing at $14.5bn.

Remittances played a crucial role in maintaining exchange rate stability, enabling the centralbank to accumulatereserves and make partial repayments ofits external debt. While official figures have not been disclosed, interbank currency dealers estimate the SBP purchased over $8bn from the banking market during the year.

Despite the impressive growth in remittances, importersfaced dollar shortages, particularly in the final quarter of FY25. Many reported paying above the quoted market rate as authorities kept the market tight to manage outflows. This, they argued, constrained industrial and economic activity in a country heavily reliant on imported raw materials.

The wide trade imbalance with a deficit of $26bn in FY25highlighted this dependency.

The remittance momentum in FY25 follows a 10.7pc increase in FY24. However, analysts warn that sustaining such high growth in FY26 will be challenging.

A major factor behind the surge was the relocation of IT-related businesses abroad, along with a significant outflow of skilled and semi-skilled Pakistani workers over the past two years. Bankers believe many of these individuals have been remitting part of their earnings back home.

Saudi Arabia remained the largest source of remittances,contributing $9.345bn up 26pc. The UAE posted the sharpest rise, with a 41.5pc increase to $7.829bn, while inflows from the UK grew 30.6pc to $5.9bn.

A notable development was the increasing share of remittances from the European Union, which have now overtaken inflows from the Gulf Cooperation Council (GCC) countries. Remittances from EU nations totalled $4.53bn in FY25, compared to $3.7bn from the GCC.

The United States also contributed $3.7bn roughly matching Pakistan`s trade surplus with the US, a matter currently under bilateral negotiation.