Pakistan’s spending on remittance incentives jumped 70% to Rs124.14 billion in fiscal year 2025, official records show, even as remittance inflows rose 27% to a record $38.3 billion, according to a news report.
The surge in cost prompted the Economic Coordination Committee (ECC) to rationalise cash rewards under the Pakistan Remittance Initiative (PRI) to manage the burden on the national exchequer.
The rise in remittances was largely driven by funds from Saudi Arabia, the UAE, the UK, and European Union countries, placing Pakistan as the world’s fifth-largest remittance recipient and second in South Asia.
The State Bank of Pakistan (SBP) attributed the 70% rise in cost from Rs72.95 billion in FY24 to several factors. One key reason was the increase in incentives under the Transfer to Cash Incentive Scheme (TTCIS), aimed at reversing the declining trend observed in FY23 and the early months of FY24.
Another factor was the restoration of the Saudi corridor, which accounts for 25% of total inflows, under the TTCIS. The SBP also highlighted a 60% depreciation of the Pakistani rupee against the Saudi riyal.
The overall surge in remittance volumes following policy adjustments contributed to the higher cost of incentives. Remittances in July alone grew 7.4% year-on-year.
To manage the rising fiscal burden, the Economic Coordination Committee (ECC) recently approved revisions to the TTCIS incentive structure on SBP’s recommendation.
Under the updated framework, the reward per transaction has been standardised at 20 riyals, replacing the previous 20–30 riyal range, and the minimum eligible transaction has been raised from $100 to $200.
Remittance inflows have grown nearly fivefold since FY09, rising from $7.8 billion to $38.3 billion in FY25. Over the past decade, this represents a 92% increase, making remittances the largest source of foreign exchange, surpassing export earnings.
Since 2009, the Pakistan Remittance Initiative (PRI) has expanded formal channels for remittances, increasing participating financial institutions from around 25 to over 50 by 2024.
These include conventional banks, Islamic banks, microfinance banks, and exchange companies, while electronic money institutions can also facilitate transfers through banks. International entities supporting remittances have grown from 45 in 2009 to roughly 400 today, with 33 new entrants added in FY24 alone.
