Government of Pakistan Restarts Remittance Subsidies Due To Exchange Pressure

The Government of Pakistan has stopped remittance subsidies, which included the Pakistan Remittance Initiative (PRI), which has been restarted or resumed on an emergency basis via providing 30 billion PKR for now. It is expected that remittance inflow subsidies will increase more in coming days. 30 billion PKR is just on an initial basis, to resume or restart the process of remittance inflows. The Government of Pakistan, at first, did not allot any funds to PRI and shifted the burden onto the State Bank of Pakistan to fund PRI. However, SBP rejected it by stating that it is not the job of SBP to fund it, as under the IMF program, the State Bank of Pakistan cannot fund or provide subsidies to anyone or any scheme of government. 

Due to this, the government of Pakistan was warned by the State Bank of Pakistan that remittance inflows had been reduced to double digits at least by the middle of July. However, the government of Pakistan rejected the claim and said that it cannot solely be due to PRI or the subsidy being removed by the government of Pakistan. It is reported by Express Tribune Pakistan that, due to the orders of Prime Minister Shahbaz Sharif, the Finance Ministry will approve PKR 30 billion for remittance inflows as soon as possible. However, the amount will be fully funded, and this amount is on a temporary basis. 

It was expected, as the government of Pakistan, since 2 weeks ago, has ordered banks to charge the least for dollars via import or export and also warned exchange companies against artificially increasing the dollar rate against the PKR. Pakistan requires huge external loans to pay off debts, and it cannot afford any kind of hiccups against remittance inflows. It was wrong advice or a mistake by the Finance Ministry not to put PRI in the budget for remittances.