Saudi Arabia, UAE, and UK drive record-breaking remittance inflows as overseas Pakistanis send more money home than in any previous January
Pakistan’s remittance inflows reached $3.46 billion in January 2026, a 15.4% year-on-year increase and the strongest performance for any January on record. The State Bank of Pakistan released these figures on Tuesday. Seven-month totals reached $23.2 billion, up from $20.9 billion in the same period last year.
Saudi Arabia topped the list of remittance sources. Expatriates there sent $740 million in January. The UAE came in second at $694 million, up 12% compared to the same month last year. The UK followed with $572 million, a 29% yearly increase.
Dawn reported that the January figure represents the second-highest collection this fiscal year, just behind December’s $3.59 billion.
Why Remittances Keep Growing
Sana Tawfik, Head of Research at Arif Habib Limited, told Geo.tv that remittances had never touched this level in any previous January. She attributed the surge to a larger overseas Pakistani workforce, greater stability of the rupee, and a narrowing gap between formal and informal exchange markets.
The reduced gap between official bank rates and black market rates has encouraged workers to channel funds through official banking routes, Tawfik said.
Topline Securities noted that the growth momentum continues because of higher manpower exports in previous years, lower differentials in the formal and informal exchange market, and the continuation of the government’s remittance incentive package.
Saudi Arabia and UAE Lead Pakistan’s Remittance Boom
Business Recorder reported that EU countries recorded the highest growth rate at 36% year-on-year, with total inflows of $480 million in January. The UK showed a 29% yearly increase. Remittances from the US stood at $295 million, a 1% decrease compared to last year.
For the entire July-January period, Saudi Arabia remained the biggest source with $5.45 billion in total remittances. The UAE sent $4.78 billion, while UK remittances totaled $3.479 billion during the seven-month period.
According to Dawn, the highest growth of 25% was noted in inflows from EU countries, with receipts totaling $3.1 billion. Inflows from the UAE and UK saw growth of 11.7% and 11.6% respectively.
Full Year Forecast Exceeds Original Targets
The government initially projected total remittances of $40 billion for fiscal year 2026. With $23.2 billion already received in seven months, the target appears within reach.
Khaleej Times reported that experts now expect remittances to exceed $41 billion and could approach $42 billion if the current trend holds. Tawfik said such an outcome would mark the highest remittance inflow on record for any fiscal year and would play a crucial role in supporting Pakistan’s external account.
Topline Securities maintained its full-year FY26 remittance forecast at $41 billion, representing a 7.5% increase over FY25 inflows of $38 billion.
What This Means for Pakistan’s Economy and Currency Reserves
The central bank’s bi-annual monetary policy report estimates that the SBP’s foreign exchange reserves would reach around $18 billion in FY26.
Dawn reported that economists have expressed concerns about the country’s growing reliance on overseas Pakistanis. They note that any change in the geopolitical situation, especially in the Middle East, could reduce demand for overseas workers. They suggest the government should take steps to increase export volumes.
The SBP has been buying dollars from the inter-bank currency market to improve its reserves and service foreign debt. Pakistan has to pay $2 billion to the UAE in the coming weeks, according to Dawn. Prospects for rescheduling look slim, sources indicated.
The finance minister said recently there was no external financing gap for debt servicing.
Policy Changes and Banking Infrastructure
The Pakistan Remittance Initiative has been working since 2009 to enhance home remittances through formal channels in Pakistan. The SBP noted that the number of financial institutions on the PRI network increased from around 25 in 2009 to more than 50 in 2024. This includes conventional banks, Islamic banks, microfinance banks, and exchange companies.
International partner entities have grown from around 45 in 2009 to approximately 400 currently. Electronic Money Institutions are now allowed to receive home remittances through banks.
Regional Patterns Show Growth Across Markets
Business Recorder noted that remittances from EU countries in January showed a 36% yearly increase, the highest growth rate among all regions. Inflows from the UK rose by 2% compared to $560 million in December 2025.
Remittances from Saudi Arabia were up 2% on a yearly basis but down 9% compared to the $813 million sent by expatriates in December. The UAE showed a 12% yearly increase.
Monthly and Cumulative Performance
Topline Securities reported in its Economy Alert dated February 10 that remittances in January rose 15% year-on-year, though they declined 4% month-on-month compared with December.
Maaz Mulla from Topline Securities said the January performance was supported by strong growth from the UK and European region. He noted that the cumulative trend points to sustained support from overseas Pakistanis.
According to Khaleej Times, Tawfik said the current momentum is driven more by structural and policy-related factors than short-term shocks. She noted that while geopolitical uncertainty can sometimes push remittances higher, the present situation differs.
Remittances play a significant role in supporting the country’s external account, stimulating Pakistan’s economic activity, and supplementing the incomes of remittance-dependent households. The government promotes remittances through incentives and formal channels.
