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Business Recorder
2 days ago
- Business
- Business Recorder
Pakistan govt decides to continue remittance incentive scheme
Pakistan Prime Minister Shehbaz Sharif decided on Saturday to continue the remittance incentive scheme, directing the Ministry of Finance to immediately release funds on a priority basis for the Workers' Remittances Incentive Scheme, a statement from the Prime Minister's Office (PMO) read. The development comes a few weeks after State Bank of Pakistan's (SBP) Dr Inayat Hussain reportedly cautioned that the government's decision to curtail subsidies for promoting foreign remittances, which hit a record $38 billion in F2024-25, might reduce the flow through banking channels. 'Overseas Pakistanis are our strength and a valuable asset of the country,' PM Shehbaz was quoted as saying the PMO statement on Saturday. SBP revises Telegraphic Transfer charges scheme, raises limit to $200, includes ECs 'The hard-earned remittances sent by overseas Pakistanis play a vital role in Pakistan's development, and I, along with the entire nation, deeply value their contribution. 'These remittances not only helped in covering the rising import bill but also contributed to the increase in foreign exchange reserves,' he said. 'We are removing obstacles in the way of remittances sent by hardworking overseas Pakistanis and making the system more effective, efficient, and user-friendly.' The inflow of overseas workers' remittances into Pakistan stood at $38.3 billion in fiscal year 2024-25, the highest-ever in the country's history, the SBP data showed. Remittances increased by 27% year over year, compared to $30.25 billion recorded in the previous fiscal. Home remittances play a significant role in supporting the country's external account, stimulating Pakistan's economic activity as well as supplementing the disposable incomes of remittance-dependent households.
Express Tribune
10-07-2025
- Business
- Express Tribune
Incentive cuts may hit remittances
Listen to article State Bank of Pakistan (SBP) Acting Deputy Governor Dr Inayat Hussain cautioned on Wednesday that the government's decision to curtail subsidies for promoting foreign remittances, which hit a record $38 billion, may reduce the flow through banking channels. The statement came amid a disagreement between the federal government and the central bank on shouldering subsidies in the new fiscal year 2025-26 under the Pakistan Remittance Initiative (PRI). The finance ministry has not allocated any sum for the scheme while the central bank has also shown its inability to provide funds. The steps that the government has taken will push remittances back to the informal sector, said Inayat Hussain while speaking during a meeting of the Senate Standing Committee on Finance. Headed by Senator Saleem Mandviwalla, the committee had called the SBP to explain the reasons behind the faster increase in subsidies compared to remittances. In the past few years, the subsidies increased five times compared to a rise of only two times in remittances, said Mandviwalla. The central bank reported on Wednesday that workers' remittances rose 26.6% to $38.3 billion in the just ended fiscal year. Pakistan became the fifth largest recipient of foreign remittances in the world. The Pakistan Peoples Party government launched the PRI in 2009 when the amount remitted by overseas Pakistanis was just $7.8 billion. Remittances are now the single largest source of foreign earnings, which are even $6 billion higher than exports. However, last month the government substantially reduced the remittance incentives and allocated nothing in the budget for this fiscal year compared to Rs85 billion for the last fiscal year. Against the Rs85 billion allocation, the central bank billed Rs200 billion to the Ministry of Finance. Of the total cost, around 85%, or Rs170 billion, was under the Telegraphic Transfer (TT) Charges Scheme. Additional Finance Secretary Amjad Mehmood told the standing committee that the federal cabinet had approved a revision of the scheme following a summary moved by the finance ministry. The development came amid increasing pressure on the rupee, which further depreciated to Rs284.5 in the inter-bank market. In the open market, the rate was around Rs288 per dollar while in the grey market, the rate crossed Rs290, according to market players. The central bank issued a circular last week about revisions in the remittance scheme, which shows a substantial reduction in benefits for banks and exchange companies. Inayat Hussain told the committee that the government raised the minimum eligible transaction size to $200 and introduced a flat rebate of 20 Saudi riyal (SAR) per eligible transaction, effective from July 1, 2025. The old rate was from SAR20 to SAR35, which the government has cut by 43%. The TT Charges Scheme offers a zero-cost and free transfer model to the sender and receiver for eligible remittance transactions. The old model offered SAR20 reimbursement incentive for every transaction worth $100 and above, an additional per-transaction incentive of up to 10% on growth over the previous year and a further per-transaction incentive of SAR7 for growth exceeding 10% over the previous year. The federal government also decided that a mechanism should be established for gradually phasing out the Remittance Incentive Schemes. In that regard, the SBP would propose and present an evidence-based plan by factoring in the cost-benefit analysis of the existing schemes, Raast integration with Buna and SAMA gateways, and strengthening controls vis-a-vis the transfer of remittances through formal channels. The central bank deputy governor expressed concerns over these changes and any future plan to discontinue the scheme. "The scheme is very critical in bringing remittances from the informal sector to the formal sector," he emphasised. The government has also abolished the Exchange Companies Incentive Scheme (ECIS) under which these companies were getting up to Rs4 per dollar subsidy from the government. People were attributing the increase in remittances to the Financial Action Task Force (FATF)-related measures by foreign governments but the fact is that remittances were so small that these do not fall under the FATF purview, said Hussain. The deputy governor said that it was wrong to say that only banks were benefiting from the scheme as foreign remitters were also the beneficiaries. Despite reducing the benefits from July 1, the Ministry of Finance has not allocated any money for the remittance scheme.
Business Recorder
23-04-2025
- Business
- Business Recorder
Circular debt: Govt in talks with banks to raise Rs1.275trn
ISLAMABAD: Dr Inayat Hussain Deputy Governor of the State Bank of Pakistan (SBP) said Wednesday that the government is currently negotiating terms and conditions with banks to raise around Rs. 1.275 trillion in financing for tackling the issue of circular debt. While briefing the Senate Standing Committee on Finance and Revenue on Circular Debt Restructuring on Wednesday, Deputy Governor SBP said that the SBP's negotiations with the banks have entered into the final stage. 'The expected deal is at advance stage', he added. Out of this amount of around Rs. 1.275 trillion, the government will use Rs 658 billion for payment of debt within the power sector. Break-up revealed that an amount of Rs 400 billion would be used for Sukkuk bonds and remaining amount would be used for payment of debt. An additional amount of nearly Rs 670 billion would be raised for meeting other requirements of the government. In this regard, the assets are being identified in order to secure loans from Islamic banks. Rs1.275trn loan to tackle circular debt: CPPA-G likely to sign term sheets with 18 banks Moreover, the Committee was briefed by the Deputy Governor of the State Bank of Pakistan on the government's efforts to restructure circular debt within the power sector. Senator Shibli Faraz expressed concern over the strategy, stating that securing new loans to service old ones merely shifts the burden onto the public. He noted that while the government previously paid the mark-up, this responsibility will now fall on the people. He remarked that this is not a sustainable solution, as the root causes remain unresolved, and the circular debt problem will persist unless fundamental reforms are implemented. The Senate Standing Committee on Finance and Revenue, presided over by Senator Saleem Mandviwalla, convened Wednesday at the Parliament House to deliberate on key policy, legislative, and regulatory matters. The Committee adopted the report of the Sub-Committee on 'Resolving the Issues Related to Solar Panels' and recommended that one month be given to the State Bank of Pakistan and the FBR to finalise the report for future course of action to minimize the issue of over-invoicing and under-invoicing. The committee members while discussing the Private Member's Bill titled 'The Income Tax (Amendment), 2025,' introduced by Senator Zeeshan Khanzada, unanimously decided to report to the House that the matter may be referred to the Speaker of the National Assembly to ascertain the status of the said bill as a Money Bill or otherwise. The Committee further deliberated on the federal government's rightsizing policy, with Committee members voicing concerns over its clarity and implementation. While the goal of reducing government bloat was acknowledged, questions were raised regarding the impact on existing employees. Senator Sherry Rehman emphasised the need for transparency, asking whether the abolishment of posts targets only vacant positions or also affects current staff, particularly long-serving contract employees. She further stressed the importance of a macro-level overview of the financial and human resource implications by early June. The Chairman of the Committee reiterated that both departmental mergers and affected employees must be clearly identified to present a comprehensive picture of the policy's impact. Officials confirmed to the Committee members that the data is still being compiled, with a deadline of 30 June for finalization. The meeting was attended by Senators Sherry Rehman, Shibli Faraz, Faisal Vawda, Manzoor Ahmed, the Special Secretary and Additional Secretary of the ministry of Finance and Revenue, the Additional Secretary of the Cabinet Division, Chairman FBR, Deputy Governor of the State Bank of Pakistan, and other officials from the relevant departments. Copyright Business Recorder, 2025
Express Tribune
28-03-2025
- Entertainment
- Express Tribune
Inayat Hussain remembered
The 32nd death anniversary of the legendary musician Master Inayat Hussain was observed on Wednesday, remembering his exceptional contributions to the music industry. Born in Lahore's Bhati Gate area in 1916, Hussain is celebrated for composing timeless melodies that became the hallmark of the golden era of Pakistani cinema. He passed away on March 26, 1993, following a prolonged illness, but his legacy continues to inspire generations of musicians and fans alike.
