Govt Approves Rs. 30 Billion Grant to Resume Remittance Subsidies Under PRI
Islamabad: The federal government has approved an initial Rs. 30 billion supplementary grant to revive foreign remittance subsidies under the Pakistan Remittances Initiative (PRI), following directives from Prime Minister Shehbaz Sharif.
This move comes after the Finance Ministry initially declined to finance the scheme, according to a report by the Express Tribune.
Background and Funding Challenges
In the previous fiscal year, the government allocated Rs. 87 billion for remittance-related incentives. However, the State Bank of Pakistan (SBP) later submitted claims totaling Rs. 200 billion, with Rs. 170 billion requested under the Telegraphic Transfer (TT) Charges Scheme.
Due to budgetary constraints, the Finance Ministry had asked the SBP to fund the program. But the SBP cited IMF conditions that prevent it from issuing subsidies, resulting in the suspension of the scheme and a double-digit drop in remittance inflows at the start of July.
Record-Breaking Remittances vs. Stagnant Exports
Despite earlier hurdles, Pakistan saw record remittance inflows of $38.3 billion in FY25 — a 27% increase from the previous year. In contrast, exports remained stagnant at $32 billion, underlining the critical role of remittances in the national economy.
Policy Adjustments and Future Plans
Effective July 1, 2025, the government introduced stricter eligibility for rebates. The minimum qualifying transaction for rebates is now $200, with a flat SAR 20 rebate, down from the previous SAR 20–35 range.
In another major change, the Exchange Companies Incentive Scheme (ECIS) — which offered Rs. 4 per dollar — has been discontinued.
To ensure the sustainability of remittance programs, the SBP has been tasked with preparing a cost-benefit analysis for phasing out subsidies. Additionally, a merger of payment gateways is being planned to improve efficiency and transparency in formal remittance channels.
