ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the State Bank of Pakistan (SBP)’s proposal with respect to changes in the contours of six incentives in order to improve remittances inflow and get optimal remittance inflow through formal channels.
The meeting presided over by Finance Minister Ishaq Dar on Monday was submitted a summary by the Finance Division regarding revision in home remittance incentive schemes.
The ECC, after discussion, approved the proposal of changes in the contours of six incentives schemes of the SBP in order to improve the inflow of remittances, and to get optimal remittance inflow through formal channels.
The meeting was informed that the government has been running six incentive schemes through the SBP for attracting home remittances and to encourage the inflow of remittances through formal channels.
Pakistan’s remittances stand at $2.2bn in June, 3.9% higher month-on-month
Home remittances play a significant role in supporting the country’s external account, stimulating Pakistan’s economic activity, as well as, supplementing disposable incomes of remittance-dependent households.
In the fiscal year 2021-22, the magnitude of remittance amounted to US$ 31 billion. However, in the fiscal year 2022-23, a downward trend in home remittances was observed dropping to US$ 27 billion. In order to improve the inflow of remittances, a budgetary allocation of Rs79.5 billion has been made for the current fiscal year in contrast with Rs20 billion allocated for the fiscal year 2022-23.
Further, the SBP proposed revisions in the contours of incentive schemes with the aim to get optimal remittance inflow through formal channels. These remittance incentive schemes were launched with the approval of the ECC/ Cabinet; therefore, the changes in the contours of the schemes, as proposed by the SBP, are being placed before the ECC for approval.
As per the proposal, the SBP has proposed that the existing reimbursement rate under TT charges is 20 SAR/100 US$ transaction may be increased to 30 SAR/ 100 US$ transactions.
Under the Marketing Incentive Scheme for Promotion of Home launched 2023-24, the SBP has proposed that in view of good take off, the scheme may be made permanent like other schemes and the rate of performance-based cash incentive to the Fls may be revised from Rs0.50 to Re1 incremental US$ for growth up to five per cent over the previous year, Rs2 incremental US$ for growth exceeding five per cent and up to 10 per cent over the previous year, which earlier was Rs0.75.
Moreover, for growth exceeding 10 per cent from the previous year cash incentive of Rs3 incremental US$ is proposed which was 1 PKR over 15 per cent growth earlier.
The SBP has proposed that two additional avenues a bill payment facility, and PayPak Card, a Pakistani Debit Card, for spending redeemed points may be included in the Sohni Dharti Remittance Programme (SDRP).
The SBP has also proposed that it may be empowered to decide the minimum surrendering requirement for exchange Companies (ECs) in the Interbank market on the same rate of incentive under Incentive Schemes for Exchange Companies (EC) to surrender FX in the Interbank market scheme launched to incentivize ECs with Rs1/US$ upon 100 per cent surrender in Interbank market.
The SBP proposed a new initiative of Lucky Draw Scheme launch while it proposed that M Wallet Scheme may be discontinued.
The ECC also considered and noted the comprehensive report on damaged wheat of PASSCO due to rainfall and floods, 2022, presented by the Ministry of National Food Security and Research.
On a summary moved by Ministry of Energy (Power Division) regarding a contract with TAVANIR Iran for the purchase of 104MW electricity, the ECC approved the amendments in the contract with TAVANIR related to extension of tariff for existing supply of 104MW (Jackigur-Mand) from 1st January 2022 to 31st December 2024, negotiating tariff for additional supply (Polan-Gabd) and tariff agreed for additional supply of 100MW through Polan-Gabd Transmission Line from 16th March 2023 to 31st December 2024.
The ECC also considered and approved another summary of the Power Division regarding the application of a uniform tariff for KE consumers by way of tariff rationalisation.
The ECC approved tariff rationalisation for KE by way of adjustments that shall be applicable on the consumption of April, May, and June 2023 to be recovered from consumers in three months (July, August, and September 2023), respectively.
The ECC also considered and approved the Ministry of Energy’s proposal regarding amendments in Transmission Line Policy 2015 for the inclusion of ancillary services projects in its scope.
The meeting approved the continuation of the Prime Minister’s Relief Package of five essential items on subsidised rates through the Utility Stores Corporation (USC) for the fiscal year 2023-24 from 1st August 2023 to 30th June 2024 (excluding the month of Ramzan).
The ECC also approved Technical Supplementary Grants of Rs3,000 million in favour of the Ministry of Information and Broadcasting for the Prime Minister’s Health Insurance Scheme for Media Workers, Journalists and Artists and Provisions of Film Finance Fund to MOIB and Rs500 million in favour of the Ministry of Defence for Defence Services for security-related requirements of JSHQ.
Copyright Business Recorder, 2023