- Remittances have already touched $17 billion levels during the first nine months of the current fiscal year.
- The World Bank in its report, its latest report, “Migration and Development Brief: Covid-19 Crisis through a Migration Lens", has projected 23 percent decline in remittances for Pakistan.
The Ministry of Finance has dismissed World Bank’s recent projections regarding remittances and expects remittances inflows to reach $20-$21 billion in FY2020 despite COVID-19 impact.
The Finance Division in a statement on Tuesday said that that the government measures recently to boost remittances have paid off as remittances have already touched $17 billion levels during the first nine months of the current fiscal year (Jul-Mar, FY2020) against $16 billion last year, registering a growth of 6.2pc.
The World Bank in its latest report, “Migration and Development Brief: Covid-19 Crisis through a Migration Lens", has projected 23 percent decline in remittances for Pakistan, 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 shut down as well as a decline in oil prices.
The WB stated that global remittances are projected to decline sharply by about 20 percent, while South Asia is projected to witness a 22 percent decline in remittances in 2020.
The Finance Ministry maintained that the WB estimates are based on unrealistic facts without considering the government’s efforts to give a boost to remittances during the current fiscal year.
The ministry said that 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 the inflow of remittances.
However, the ministry opined that the magnitude of pandemic impact on remittances is dependent on the intensity and duration of COVID-19. “It seems that the World Bank has taken a hypothetical worst-case scenario without considering ground realities,” the ministry maintained.
Talking about government measures to facilitate the overseas Pakistanis to send their remittances through official banking channels, the ministry said that various initiatives have already been taken by the government which include the following: The prevailing rate of TT charges has 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 15pc growth over last year may now be based on tiered growth i.e Rs.0.50 on 5pcgrowth, Rs.0.75 on 10pc growth and Rs.01 on 15pc 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 will 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.
The Finance Division informed that the FBR has been requested for amendment in Income Tax ordinance through finance bill. A ‘National Remittance Loyalty Program’ will be launched from September 01,2020 with the collaboration of major commercial banks and government agencies through which various incentives will be given to remitters through mobile apps and cards.
The division added that a Technical Supplementary Grant of Rs9.65 billion to reduce the lag time from 12 to 6 months in reimbursement of T.T charges to banks on home remittances.