A record-breaking year for overseas workers’ remittances has revived calls from business circles in Lahore for a structured mechanism to channel a portion of these inflows toward retiring the country’s external debt, rather than leaving the funds to be absorbed entirely by day-to-day consumption.

They added that, apparently, remittances are the only sector growing at a solid pace, leaving every other dollar-earning source or export sector behind. “The government should now design a policy under which a limited, predetermined share of remittances is voluntarily directed toward foreign debt repayment,” suggested Mudassar Masood Chaudhry, former executive member of the Lahore Chamber of Commerce and Industry.

His proposal comes on the back of fresh central bank data showing just how significant these flows have become. Overseas Pakistanis sent home $41.6 billion in remittances during fiscal year 2025-26, marking an 8.6% increase from the $38.3 billion received during the previous fiscal year. The State Bank of Pakistan (SBP) said the total reflected a record annual level, with Pakistan receiving an average of $3.46 billion in workers’ remittances each month.

Saudi Arabia remained the single largest source, contributing $9.75 billion over the year, followed by the UAE with $8.80 billion, the United Kingdom with $6.32 billion, the European Union with $5.22 billion, other Gulf states with $3.93 billion, and the United States with $3.62 billion.

The inflows have also fed directly into the country’s reserve position. SBP foreign exchange reserves climbed by $1.94 billion during the week ended July 3, 2026, reaching $18.47 billion, with total liquid foreign reserves crossing $23.98 billion. That marks a jump from around $13 billion a year earlier, achieved despite sizeable external debt repayments during the period.

Chaudhry argued that funds of this scale can no longer be treated purely as a cushion for household spending. Remittances, he said, have played a vital role in stabilising the economy, shoring up foreign exchange reserves and easing pressure on the external account, but their potential goes well beyond that stabilising function.

He proposed that a voluntary special overseas debt reduction fund, or a similarly transparent mechanism, could allow the diaspora to actively participate in shrinking the country’s foreign debt burden, provided the scheme carries full transparency, parliamentary oversight and safeguards that protect public confidence.

He added that remittances should also be steered toward long-term national objectives, ie strengthening the economy, investing in productive sectors and reducing debt, rather than being confined to consumption alone, calling this an urgent priority. To make that shift attractive, he said the government should roll out incentive packages and transparent investment schemes tailored for overseas Pakistanis, giving them a more direct stake in national development and debt reduction. Used wisely, he said, remittances could anchor both financial stability and the country’s long-term economic sovereignty.

A Pakistan-born US businessman Sheikh Tahir Imran said the idea deserves serious consideration but cautioned that its success would hinge entirely on execution. He noted that overseas Pakistanis have repeatedly shown willingness to support the economy during periods of stress, but any fund asking for voluntary contributions toward sovereign debt must be insulated from political interference and administered by an independent body answerable to Parliament. “Pairing such a fund with diaspora bonds or tax incentives, similar to instruments used by other remittance-dependent economies, could make participation more appealing while giving contributors measurable returns rather than relying on goodwill alone,” Imran added.