Abstract:
The Government of Pakistan reimburses SAR 30 in Telegraphic Transfer Charges
(TTC) for every USD 100 or more transferred by a foreign MTO into the country, as
compensation for their transaction costs. In May 2020, the government removed this facility
for KSA, citing zero transaction costs announced by the KSA authorities for digital money
transfers from the kingdom. The inflow of workers’ remittances from KSA began to decrease
once KSA eased the travel ban. This paper aims to estimate the impact of the withdrawal of
TTC reimbursement on remittances flowing from KSA to Pakistan. The difference-indifference (DID) method is applied to data from July 2018 to September 2022. The estimates
indicate that this policy caused an average monthly decline in remittances from KSA
between US$ 31 million and US$ 76 million. The findings appear to be robust to various
estimation adjustments.
