To tackle the economic challenges, the State Bank of Pakistan, the Ministry of Overseas Pakistanis, and the Ministry of Finance have jointly crafted a strategic plan to elevate remittances from Pakistanis abroad to $60 billion by 2034.
The initiative emerged in response to the ongoing national economic crises characterized by a depreciating currency, escalating debt, and trade deficits. These crises amplified the pressure on foreign exchange reserves and elevated remittance dependence.
Throughout the global economic downturn caused by the COVID-19 pandemic, remittances remained robust, underscoring their critical support to Pakistan’s economy. With the global economic recovery underway, there is potential to augment these financial inflows further.
Prime Minister Shehbaz Sharif directed the ministries to double remittances within a decade; as mentioned earlier, the ministries devised a detailed strategy in collaboration, which is now under the Economic Coordination Committee’s initial review.
Read: Pakistan Records a 48% Increase in Remittances in July 2024
The strategy includes innovative incentives for banks managing remittances from Saudi Arabia. Under the current structure, banks earn 30 Saudi riyals for every $100 remitted. The new proposal introduces a split incentive system, with a permanent component of 20 riyals and a variable component of up to 15 riyals, depending on the yearly remittance volume increase. Banks achieving an additional $100 million in remittances will earn a bonus, bringing their total to 35 riyals per $100 remitted.
The State Bank will conduct monthly performance reviews and adjust quarterly incentives to motivate banks to boost remittance volumes. The goal is ultimately to reduce the government’s transaction costs.
Additionally, the plan proposes enhancing incentives for exchange companies, raising the base rate for fixed components deposited in the interbank market and rewarding increments in remittances with additional financial benefits. These measures are expected to motivate exchange companies to expand their services, offer competitive rates, and improve customer experiences by integrating with banks and fintech solutions.
Read: Roshan Digital Account Hits $8 Billion in Remittances from Overseas Pakistanis
The government is also set to introduce various financial schemes and recognition awards like the “Moehsen-e-Pakistan” to engage and appreciate overseas Pakistanis for their contributions. To bolster these efforts, Dr Arshad Mahmood, Secretary of the Ministry of Overseas Pakistanis, revealed plans to appoint 26 new Community Welfare Attaches in key regions and establish 50 new skill centres across Pakistan to enhance workforce training for overseas employment.
