Remittances
Definition
Money sent by workers living abroad back to their home country, recorded as a credit in the current account of the receiving country's balance of payments.
Simple Explanation
When a Pakistani working in Saudi Arabia, UAE, UK, or the US sends money home to their family, that is a remittance. For Pakistan, remittances are massive — roughly USD 27 billion per year. This makes them Pakistan's single largest source of foreign exchange, bigger than all export earnings put together (before accounting for import costs). Remittances flow mostly through two channels: banking (Roshan Digital Account, Swift) and hawala/hundi (informal transfer networks).
In Pakistan
Pakistan consistently receives USD 25–30 billion in remittances annually, mostly from: Saudi Arabia (~25%), UAE (~20%), UK (~15%), USA (~10%), and other Gulf states. During the 2022–2023 FX crisis, remittances became even more critical as they helped partially offset the current account deficit. The SBP introduced the 'Roshan Digital Account' (RDA) to attract remittances from overseas Pakistanis into formal banking. The government launched 'Pakistan Remittance Initiative (PRI)' to incentivise bank transfers over hawala.
Example
If a Pakistani nurse working in the UAE earns AED 8,000/month and sends AED 5,000 (≈USD 1,360) home each month, that single worker contributes USD 16,320 per year to Pakistan's remittance inflows. With ~9 million overseas Pakistanis, even modest per-person transfers aggregate into tens of billions of dollars — a lifeline for Pakistan's external accounts.
Frequently Asked Questions
What is the difference between remittances through banking and hawala?
Banking remittances (Swift, Roshan Digital Account, Western Union through banks) are official, tracked, and included in Pakistan's official BOP statistics. Hawala/hundi is an informal trust-based network: a sender pays money to a hawala broker in the UAE; the broker contacts a counterpart in Lahore who pays the recipient. No money physically crosses borders. Hawala is faster and cheaper but not captured in official statistics — meaning Pakistan's true remittance inflows may exceed official numbers.