Govt pledges incentive for exchange firms to boost foreign currency supply

KARACHI: The government planned to offer a rebate incentive to exchange firms for attracting remittances from overseas Pakistani in a push to shore up the country’s dollar supply.

“Finance minister Shaukat Tarin has promised the exchange companies to provide them a rebate for receiving inward remittances as per the similar ratio the government gives to the commercial banks,” the Exchange Companies Association of Pakistan (ECAP) said in a statement on Monday.

The minister and the central bank’s governor Dr Reza Baqir held a meeting with the officials of ECAP in Karachi to seek proposals from the exchange companies to boost foreign exchange and workers’ remittances.

“The minister asked the companies to provide maximum foreign exchange to the government as it’s in a dire need of it,” the statement said.

The ECAP chairman Malik Bostan told Tarin that the exchange firms have the potential to attract $10 billion in remittances per year. “To do so, the government should announce incentives for these companies,” the statement quoted Bostan as saying.

Bostan said the exchange firms provided $4.5 billion to the government last year, taking a total of $13 billion since 2018.

The chairman ECAP told the minister and the governor State Bank of Pakistan (SBP) that people have large sums of dollars in their homes and bank lockers. “These dollars were issued before 2013 and now the commercial banks are neither buying these old notes from the public as well as from the exchange companies, nor depositing them in foreign currency accounts.”

People are worried as the banks are only accepting dollars issued after 2013, he added.

“Currently, the US central bank is accepting such dollars and exchange companies are exporting them with SBP’s permission but export procedure is too lengthily as it takes 20 days to bring back the US currency to the country, which resulted in the blockage of the companies’ capital,” Bostan explained.

“If the SBP allows us to export old dollars on a daily basis like other third foreign currencies, these dollars can be deposited in bank accounts and the people can make investments in the rupee after selling these dollars,” he said.

The statement said minister Tarin appreciated the proposal and asked the central bank governor to permit the exchange firms to export old dollars on a daily basis.