Islamabad: The Economic Coordination Committee (ECC) of the Cabinet, chaired by the Finance & Revenue Federal Minister Senator Muhammad Aurangzeb, reviewed and approved revisions to two key remittances incentive schemes, following a proposal from the State Bank of Pakistan (SBP). The news has been sourced from an article on August 29.
Revisions to the Telegraphic Transfer (TT) Charges Scheme:
The ECC has approved changes to the reimbursement structure under the TT Charges Scheme. The current flat reimbursement rate of SAR 30 per eligible transaction will now be divided into two components:
Fixed Component: A reimbursement of SAR 20 for all eligible transactions of USD 100 and above.
Variable Component: An additional reimbursement, linked to incremental growth in remittances, ranging from SAR 8 to SAR 15, depending on performance. Banks demonstrating higher increases in remittance inflows will receive proportionately higher rewards, potentially up to SAR 35 per eligible transaction.
The SBP will evaluate bank performance monthly, with reimbursements adjusted accordingly. The revisions aim to incentivize banks to enhance remittance inflows while potentially reducing the overall cost of TT Charges for the government.
Revised Incentive Scheme for Exchange Companies (ECS):
The ECC also approved changes to the incentive scheme for exchange companies.
Fixed Component: The base rate for the fixed component will increase from PKR 1 to PKR 2 per USD surrendered in the interbank market. A variable component will also be introduced, linked to incremental growth in remittances:
Variable Component: PKR 3 per USD for growth up to 5% or USD 25 million, and PKR 4 per USD for growth above 5% or over USD 25 million.
These payments will be contingent on the surrender of foreign exchange to SBP-designated banks. The performance of exchange companies will be evaluated monthly by the SBP, with adjustments made as needed.
This revision is expected to encourage exchange companies to increase remittance inflows, covering some of their operational costs that have risen due to the depreciation of the Pakistani Rupee.
Infrastructure Projects under CPEC
The ECC also considered a summary from the Ministry of Communications regarding the realignment of the Karakoram Highway (KKH) under the China-Pakistan Economic Corridor (CPEC). The ECC authorised the Ministry of Communications and the National Highway Authority to proceed with the procurement process for the construction of the KKH realignment (Thakot-Raikot Section, 241 KM) under CPEC Phase-II, following Public Procurement Rules.
Additionally, the ECC reviewed the Chakdara-Timergara Road Project (N-45) and granted authorisation for the Ministry of Communications to proceed with the procurement of consultancy services required for Section-1 (Chakdara-Timergara, 39km) under the Chakdara-Chitral Road Project.
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