Last updated when April 28, 2020 13:34
Pakistan’s remittances reached $ 20-21 billion in the current fiscal year.
ISLAMABAD (Dunya News) – The Ministry of Finance said that the government’s recently announced measures to increase remittances have paid off because remittances have touched the level of $ 17 billion during the first nine months of the current fiscal year (July-Mar, FY2020) towards $ 16 billion last year, recorded a 6.2% growth.
This trend shows that the concerns and forecasts as reported recently in the media regarding the World Bank’s forecast that there will be no remittance inflows from March onwards are very unrealistic and based on current money transfer trends and COVID-19 estimates As a result, the money transfer inflows are expected to reach $ 20-21 billion in FY2020.
The Finance Division has noted that to encourage and facilitate Pakistanis overseas to send their remittances through official banking channels, various initiatives have been taken by the government which include:
The applicable TT exchange rate has been increased from SAR 10 / – to SAR 20 / – for transactions between USD 100-200. An additional fee of Rs. 3 billion to the Government.
The existing incentive schemes for marketing home remittances namely PKR 01 against USD 01 from total shipments outside the 15% growth from last year can now be based on tiered growth ie Rs.0.50 at 5% growth, Rs.0.75 at 10% growth and Rs. 01 at a growth of 15%. It will cost an additional Rs. 600 million to the Government.
To increase home remittance customers and encourage them to use banking channels, withholding taxes will be exempted from July 1, 2020 on cash withdrawals or on the issuance of banking instruments / transfers from domestic bank accounts to the extent of remittances received from abroad in the account within a year. FBR has been asked to amend the Income Tax regulations through financial bills.
The ‘National Remittance Loyalty Program’ will be launched from September 1, 2020 in collaboration with major commercial banks and government agencies where various incentives will be provided to senders through applications and cellular cards.
Additional Technical Grants of Rs.9.65 billion to reduce the time lag from 12 to 6 months in reimbursement of costs to banks for home payments.
In addition to the above steps, the current government has increased its diplomatic relations with the Gulf States which has helped restore the confidence of foreign employers to the Pakistani workforce. As a result, labor exports have increased to Rs. 491,854 during July-February, 2020.
The Finance Division also pointed out that while media reports quoted the World Bank projecting a 23 percent decrease in remittances, totaling around $ 17 billion by 2020, “compared to $ 22.5 billion in 2019, due to the economic crisis caused by the Covid-19 pandemic. . and shutdown and falling oil prices “. But, in fact, the flow of remittances during FY2019 reached $ 21.7 billion, not $ 22.5 billion.
The Ministry of Finance further stated that World Bank estimates are based on unrealistic facts without considering the government’s efforts to provide encouragement to remittances during the current fiscal year. There is no doubt that COVID-19 has created many economic challenges because of locking, slowing business and falling oil prices, therefore, it can also slow down the flow of remittances. The magnitude of the impact of a pandemic on remittances, however, depends on the intensity and duration of COVID-19. It seems that the World Bank has taken a hypothetical scenario of the worst case without considering basic reality.
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