RIZWAN BHATTI

KARACHI: In order to further encourage inflows of home remittances through formal channels, the federal government has announced some more incentives for marketing of home remittances for this fiscal year. Pakistan has received record high inflows of workers’ remittances during the first eleven months of the last fiscal year (FY21) driven by proactive policy measures by the federal government and the State Bank of Pakistan (SBP) SBP to incentivise the use of formal channels. Furthermore, the travel restrictions likely played a major role in diverting a significant chunk of workers’ remittances that used to arrive into these countries via informal methods towards the official banking channels.

On a cumulative basis, inflows of home remittances surged to all time level of $ 26.7 billion during July-May FY21, higher by 29.4 percent over the same period last year. Remittances during the first eleven months of FY21 also crossed the full FY20 level by $3.6 billion.

Now in order to increase the home remittances inflows and further encourage promotion of home remittances through formal/ legal channels, the government of Pakistan has approved reintroduction of Incentive Scheme for Marketing of Home Remittances with effective from July 01, 2021 to June 30, 2022 to improve the home remittance performance for FY22. As per revised incentive scheme, the government has announced PKR 0.50 per each incremental USD mobilized over 5 percent growth during the next fiscal year. Home remittances exceeding 5 percent growth in FY22 (July 01, 2021 to June 30, 2022) compared with the levels achieved in FY21 (July 1, 2020 to June 30, 2021) will be eligible for this incremental.

Home remittances exceeding 10 percent growth in FY22 compared with the levels achieved in FY21, will get an additional PKR 0.75 per each incremental USD mobilize over 10 percent growth.

Similarly, as per the federal government announcement, Banks, microfinance banks and Exchange Companies will get an additional PKR 1 per each incremental USD on home remittances exceeding 15 percent growth in FY22 compared with the levels achieved in FY21.

With an aim to encourage domestic banks, microfinance bank and exchange companies providing home remittance disbursement services, a performance based the incentive scheme for promotion of home remittances was announced to enhance their marketing, promotional and awareness efforts for home remittance products and services. The federal government will reimburse these expenses through SBP.