Remittances are a significant part of our foreign exchange reserves. They play an essential role in building financial resilience for Pakistan. $2.47 billion worth of remittances received in June 2020 from $1.64b in June 2019 will indeed greatly help Pakistan during the financial meltdown caused by COVID-19. The full-year remittances of $23.10 billion in fiscal year (FY) 2020, were higher by 6.4 percent compared to $21. 74 billion in FY19, showing that government policy in this regard was effective.

Remittances have slowly become the second most important source of foreign exchange after exports of manufactured goods. Historically, remittances have been relatively stable compared to direct investment and portfolio inflows; more recently, remittances have also been more stable than aid inflows.

Conversely, there is a downside to the rising importance of this source of inflow. With worker remittances, the equivalent of over 6 percent of GDP, any disruption to the flow can have severe repercussions for the economy. This vulnerability is starkly demonstrated in the uncomfortable position Pakistan finds itself due to job losses through COVID-19. Remittances can also work as a curse in disguise whenever the government decides to maintain neutrality in its relations with other nations.

However, COVID-19 also teaches us that remittances can be fickle and more affected by the economic slump compared to foreign direct investment (FDI). The government needs to adopt the all-time effective strategy of not putting all its eggs in one basket. Policies and procedures must be devised that can make Pakistan as one of the prime attractions for FDI. Perhaps, the state should consider striking a balance between these two principal sources of cash inflows. Excessive reliance on one can always turn itself into a problem later.