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Remittances expected to touch $21 billion figure in FY20: Finance Ministry

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April 28, 2020: The remittances from overseas Pakistanis are expected to reach $20-$21 billion during the current fiscal year (2019-20), the Finance Ministry said on Tuesday.

According to a statement issued here Tuesday, the measures, announced by the government recently to boost remittances, paid off as the money remitted by overseas Pakistanis touched US $ 17 billion figure during the first nine months of the current fiscal year (Jul-Mar, FY2020) against $16 billion last year, registering a growth of 6.2 percent.

“This trend shows that apprehensions and estimates as reported recently in the media with regard to estimates of the World Bank that there would be no inflows of remittances from March onwards, are highly unrealistic and on the basis of the current trend in remittances and estimated COVID-19 impact. The figure of remittances inflows is expected to reach US $ 20- US $ 21 billion during the current fiscal year,” the statement added.

The Finance Division noted that in order to encourage and facilitate the overseas Pakistanis to send their remittances through official banking channels, various initiatives had already been taken by the government.

According to the statement under these initiatives, the prevailing rate of TT (Telegraphic Transfer) charges had been enhanced from SAR 10 to SAR 20 for transactions between USD 100-200. It would cost an additional amount of Rs. 3 billion to the government.

The existing incentive scheme for the marketing of home remittances i.e PKR 01 against USD 01 of remittance amount beyond 15 percent growth over last year may now be based on tiered growth i.e Rs.0.50 on 5 percent growth, Rs.0.75 on 10 percent growth and Rs.01 on 15 percent growth. It would cost an additional Rs.600 million to the government.

To leverage home remittance customers and encourage them to use banking channels, withholding tax would be exempted from Jul 01, 2020, on cash withdrawal or on the issuance of banking instruments/transfers from a domestic bank account to the extent of remittances amount received from abroad in that account in a year.

According to the statement, FBR had been requested for an amendment in the Income Tax ordinance through the finance bill.

A ‘National Remittance Loyalty Program’ would be launched from September 01, 2020, with the collaboration of major commercial banks and government agencies through which various incentives would be given to remitters through mobile apps and cards.

The initiatives also include the provision of the Technical Supplementary Grant of Rs.9.65 billion to reduce the lag time from 12 to 6 months in reimbursement of T.T charges to banks on home remittances.

Besides the above measures, the incumbent government had improved its diplomatic relations with the Gulf States which helped to restore the confidence of foreign employers in the Pakistani workforce.

Resultantly, the export of manpower has been increased to Rs.491.854 during Jul-Feb, 2020, the statement added.

The Finance Division has also pointed out that while the media reports quote the World Bank as projecting 23 pc decline in remittances, totaling about $17 billion in 2020, “compared with $22.5 billion in 2019, due to the economic crisis induced by the Covid-19 pandemic and shutdown as well as decline in oil prices”.

However, in reality, the remittances inflows during FY2019 stood at $21.7 billion instead of US $ 22.5 billion. 

The Finance Ministry further maintained that the World Bank estimates were based on unrealistic facts without considering the government’s efforts to give a boost to remittances during the current fiscal year.

“There is no doubt that COVID-19 has created multiple economic challenges owing to lockdown, a slowdown in business and declining oil prices, hence, it may also slowdown inflow of remittances,” it said adding that the magnitude of pandemic impact on remittances is, however, dependent on the intensity and duration of COVID-19.

It seems that the World Bank had taken a hypothetical worst-case scenario without considering ground realities.

APP

Posted on: 2020-04-28T12:51:00+05:00

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