EMITTANCES hit an all-time high of nearly $4.1bn last month, breaking the streak of $3bn per month during the July-February period, to everyone`s surprise. The March remittances rose by 37pc from a year ago and were up by 30pc compared to the previous month`s tally of $3.1bn.

Cumulatively, the flows from overseas Pakistanis have grown by 33pc in the first three quarters of FY25 to little over $28bn from just above $21bn the previous year. The State Bank now expects to receive $38bn in remittances, up from previous projections of $35bn this year. The growth in remittances this year is owed to a stable exchange rate, increase in the immigration of tech professionals to the Gulf, and the relative easing of import curbs.

The spike in flows last month was further aided by Ramazan and Eid. Even though analysts believe that the latest tally is `a blip in the matrix` due to seasonal factors, it shows the potential of significant boosts to flows in a short period with the right incentives offered to the Pakistani diaspora.

That the growth in remittances has far outpaced the trade deficit during the fiscal year underlines the critical support these flows are providing to the current account. Effectively, remittances have proved to be the most crucial lifeline for Pakistan in recent years, keeping its economy afloat and enabling it to pay its burgeoning import bills as foreign official and private capital flows dry up in spite of the IMF bailout. The share of remittances in GDP for Pakistan has increased from 1pc in 2000 to around 9pc, or more than the share of exports. Encouraged by the sustained growth in cash sent home by Pakistanis abroad, the State Bank hopes to raise its international reserves to $14bn by end-June, despite significant debt payments made this year.

That said, Pakistan also owes a lot to improvement in other economic fundamentals for the upgrade by Fitch Ratings in the long-term foreign currency issuer default rating by one notch to `B-` from `CCC+` with a stable outlook. It earlier had a Brating with a stable outlook from December 2018 to July 2022. The rating upgrade is expected to bolster investor confidence both domestic and foreign. The upgrade will make it easier for Pakistan to access international debt markets as the government plans to raise cash from Chinese and other bond markets later this year to meet its large funding needs that exist in spite of regular debt rollovers and safe deposits from friendly countries. Other global rating agencies are expected to follow suit and upgrade their ratings for Pakistan, deepening investor confidence in its debt.

As the State Bank governor said, Pakistan has seen off a period of macroeconomic instability characterised by high inflation, low reserves and fears of default. Now it is time to build on the gains.