Junaid Ahmed

The household welfare-enhancing feature of migrant remittances to Pakistan is well known, however, it is the macroeconomic role that has increasingly gained prominence at the policy level of the country. The amount of over $20 billion that overseas Pakistanis from around the world send back each year covers more than half of the country’s annual current account deficit. Besides, these inflows have proven to be stable over time and had thereby helped smoothen the country’s business cycle.

Migrant remittances have proved a lifeline for Pakistan’s economy. They have played a non-negligible role in improving employment, lowering the level and severity of poverty, and increasing foreign exchange reserves thereby financing the current account deficit.Other foreign flows, mainly foreign direct investment, and foreign aid are volatile and greatly depend on the economic state and the diplomatic relationship with the sending country.