ECC Approves Rupee Incentive For Foreign Exchange Companies To Boost Diaspora Entry Into Interbank Market
ISLAMABAD: The Cabinet’s Economic Coordination Committee (ECC) on Friday approved a cash incentive for foreign exchange companies on remitting foreign currency remittances on the official interbank market.
The finance division recommended a proposal from the State Bank of Pakistan for an incentive for exchange companies against ceding currencies in the interbank market.
According to the proposal, “exchange companies can receive a cash incentive from Re1 against the return of every US dollar raised from inbound remittances.”
Foreign exchange firms are required to return 100% of remittances entering the interbank market, the ECC statement released at the meeting said.
“The ECC approved the proposal with the order to review the model for further improvements.”
Minister of Finance Shaukat Tarin chaired the ECC meeting.
Minister of National Food Security Syed Fakhar Imam, Minister of Planning, Development and Special Initiatives Asad Umar, Minister of Industry and Production Makhdoom Khusro Bakhtiar, Minister of Energy Hammad Azhar, Minister of Privatization Muhammedmian Soomro, Minister of Railways Muhammad Azam Khan Swati, Minister for Maritime Affairs Syed Ali Haider Zaidi, federal secretaries and senior officers also attended the meeting.
The ECC also approved the renewal of a principal amount of $ 142 million as well as mark-up payments for two years ending December 31, 2024 at the Roosevelt Hotel, New York.
PIA Investment Limited (PIA-IL) was unable to pay the principal amount of the loan and mark-up payments on behalf of Roosevelt Hotel due to the hotel closure.
“The ECC approved the proposal with instructions to the Aviation Division to prepare a roadmap for the permanent solution to the problem.”
The ECC also approved the revision of customer pricing and subsidy period of mark-up under the government level I mark-up subsidy scheme for low cost projects of Naya Pakistan Housing & Development Authority and inclusion of housing finance companies (HFCs) in G-MSS for housing finance with instructions that “commercial banks should not be directly involved in NAPHDA projects”.
The ECC also approved an extension of the deadline for the NHA to prepare a commercially viable business plan until June 2022 with the same conditions regarding CDL as those decided by the federal cabinet.
“The NHA debt restriction would be tied to the outcome of the business plan. “
The ECC also asked the Ministry of Communication to regularly submit a monthly progress report and prepare a business plan well in advance of the deadline.
The ECC also approved additional funds of Rs8 billion against the government’s approved share for Sialkot (Sambrial) – Kharian Motorway Project (SKMP).
The gas rate approved by the ECC for the Fatima Fertilizer (Sheikhupura plant) and Agritech operations for the period from October 2021 to January 2022, and to be maintained at Rs839 / MMBTU (with a variable contribution margin @ 186 / bag ).
The ECC also approved the issuance of a government sovereign guarantee for the NECOP project worth $ 5.822 million for Lot IV and $ 26.154 million for Lot V to the CETC, Beijing, China to repay the loan in seven years, including a two-year grace period.
The committee approved the issuance of a sovereign guarantee in the amount of Rs 24.188 billion to Habib Metropolitan Bank Ltd and a syndicate of two banks led by United Bank Limited for the remaining term of the loan and a letter of comfort in favor of the lending banks for a new financing agreement relating to the development project of the infrastructure of the LNG-II gas pipeline.
The ECC has also approved, in principle, the overall transition from LIBOR to alternative benchmarks, with guidelines that benchmarks to be adopted in the future can be submitted to the ECC for approval.
The ECC discussed revising the prices of non-subsidized products and maintaining untargeted subsidies after December 31, 2021. “After deliberation, the ECC authorized the Ministry of Industry and Production to continue subsidizing the five essentials for just one month in January 2022.