The recent termination of the Pakistan Remittance Initiative (PRI) scheme has raised significant questions about the future stability of remittances in Pakistan, as the nation struggles with the end of a program that has played a vital role in stabilizing its foreign reserves.
Malik Muhammad Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), today highlighted the impact of the ongoing crackdown on Hawala and Hundi networks, which has led to a significant decrease in the value of the US dollar against the Pakistani rupee. The dollar, which was once at a peak of 340 rupees in the open market, has now decreased to approximately 279 rupees. Bostan credited decisive actions against illegal currency trading for this stability and predicted further reduction is expected if these efforts continue.
In a special address, Bostan announced the State Bank of Pakistan’s decision to terminate the PRI scheme, which was influenced by the International Monetary Fund (IMF). Established in 2009, the PRI played an essential role in increasing remittances through formal channels, which grew from 9 billion dollars to nearly 41 billion dollars. However, Bostan argued that financial pressure could have been alleviated by reforming the subsidy and fee structures while maintaining the convenience of formal remittance channels.
Since 2009, the expatriate population has increased from 5 million to approximately 15 million, adding approximately 2 billion dollars annually in remittances. This increase has boosted foreign exchange reserves from 3 billion dollars to nearly 22 billion dollars.
Despite the termination of the PRI, Bostan assured that the State Bank and exchange companies remain committed to providing affordable and convenient remittance solutions for Pakistanis abroad to ensure the flow of legal funds into the country remains secure.