ISLAMABAD         -              The remittances from overseas Pakistanis are expected to reach to $20- $21 billion during the current fiscal year (2019-20), the Finance Ministry said.

According to statement, 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 per cent.

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. three 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 per cent growth over last year may now be based on tiered growth i.e Rs.0.50 on 5 per cent growth, Rs.0.75 on 10 per cent growth and Rs.01 on 15 per cent 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 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 amendment in Income Tax ordinance through finance bill.

A ‘National Remittance Loyalty Program’ would be launched from September 01, 2020 with 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 Pakistani workforce. Resultantly, 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 US $ 17 billion in 2020, “compared with US $ 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 US $ 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 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.