ECC Approves Revisions in Home Remittances Incentive Schemes to Boost Pakistan’s Foreign Exchange Reserves

Overview of ECC Meeting

On August 30, 2024, the Economic Coordination Committee (ECC) of the Cabinet, chaired by Federal Minister for Finance & Revenue Senator Muhammad Aurangzeb, convened to discuss critical economic policies and projects. The meeting focused on revising home remittances incentive schemes and making decisions regarding major infrastructure projects under the China-Pakistan Economic Corridor (CPEC).

Revisions to Remittances Incentive Schemes

Reimbursement of Telegraphic Transfer (TT) Charges Scheme

The ECC approved a revision to the Reimbursement of Telegraphic Transfer (TT) Charges Scheme. Previously, the flat reimbursement rate for eligible transactions was SAR 30. Under the new scheme, this amount will be divided into two components:

• Fixed Component: SAR 20 per eligible transaction for amounts of USD 100 and above.
• Variable Component: SAR 8-15, linked to incremental growth in remittances. Banks will receive additional rewards based on their performance in increasing remittance inflows. For incremental growth up to 10% or USD 100 million, banks will receive SAR 8 per transaction. For growth exceeding this threshold, the additional reimbursement will be SAR 7 per transaction. This structure aims to incentivize higher remittance volumes and reduce overall TT charges for the government.

Incentive Scheme for Exchange Companies (ECS)

The incentive scheme for Exchange Companies (ECS) has also been revised. The base rate for the fixed component will increase from Rs. 1 to Rs. 2 per USD surrendered to SBP-designated banks. The variable component, linked to incremental growth in remittances, will be as follows:

• Up to 5% or USD 25 million growth: Rs. 3 per USD.
• Exceeding 5% or USD 25 million growth: Rs. 4 per USD.

Payments will be contingent on surrendering foreign exchange to designated banks, and performance will be evaluated monthly. This revision is expected to motivate ECSs to boost remittance mobilization and cover increased operational costs due to PKR depreciation.

Developments in CPEC Projects

Realignment of KKH (Thakot-Raikot)

The ECC reviewed a summary from the Ministry of Communications regarding the Framework Agreement between China and Pakistan on the realignment of the Karakoram Highway (KKH) Thakot-Raikot section under CPEC. The Committee authorized the Ministry and the National Highway Authority to proceed with procurement in accordance with Public Procurement Rules, 2004.

Chakdara-Timergara Road Project

Another significant agenda item was the Chakdara-Timergara Road Project (N-45). The ECC permitted the Ministry of Communications and National Highway Authority to invoke Rule-5 of Public Procurement Rules-2004 for the procurement of consultancy services required for the project.