In its attempt to promote remittances, the State Bank of Pakistan (SBP) has decided to allow Foreign Exchange Companies (ECs) to maintain a separate currency account for each Money Transfer Operator (MTO).
The SBP, in a notification on Saturday, also advised that ECs can use these accounts to receive home remittances related to commissions/fees or foreign exchange gains provided that all such funds are remitted to the interbank market. the same day.
“However, incentives under this program will only be provided on currencies generated from home remittances,” the notification reads.
Despite the resumption of international travel amid easing Covid-19 restrictions, workers’ remittances managed to increase, reaching $23 billion in the first nine months of this fiscal year (FY22), a growth 7% annually.
Remittances from foreign workers are a crucial source of foreign exchange reserves for Pakistan which is in talks with the International Monetary Fund (IMF) on resuming its bailout. The lack of foreign exchange has also put pressure on the country’s currency which has depreciated by around 17% over the past 12 months.
Despite the increase in remittances, foreign exchange reserves held by the central bank shrunk to $10.558 billion, due to foreign debt and other payments, the latest data showed.