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ECC restricts cash redemption on remittances

By Khaleeq Kiani 2021-10-08
ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday empowered a committee led by Finance Minister Shaukat Tarin to ban or allow export of onions and tomatoes based on actual data and decided to restrict cash redemption of reward points onremittances to only those overseas Pakistanis who return to the motherland permanently.

A meeting of the ECC presided over by Finance Minister Tarin also decided to allocate280,000 tonnes of wheat for the Utility Stores Corporation (USC) and 300,000 tonnes for Azad Kashmir during the current year.

Informed sources said thecommerce ministry had come up with a summary seeking to allow export of onions and tomatoes because both were perishable items and their stocks could not be sustained for long to thedisadvantage of local farmers.

The sources said the finance minister wanted to have complete data on monthly domestic consumption of both items, production numbers and estimated surpluses to reach an informed decision on whether to ban or export and of howmuch quantities.

Some participants of the meeting were of the opinion that given the rising inflationary trends, the decision should be based on complete data while also ensuring buffer stocks to maintain domestic prices at reasonable levels. It was agreed that the export, if allowed, should be limited to 15 days or a month and based on the domestic price situation the practice should be reviewed.

Interestingly, the finance minister had asked the ministries of commerce and national food security a couple of weeks ago to come up with a summary to impose a ban on export of onions and tomatoes after consultation with key stakeholders to arrest the increase in prices of both items. During a meeting on Wednesday, Mr Tarin had also directed the commerce ministry to present in the upcoming ECC meeting a well-rounded proposal related to export of onions. The meeting was told that over all the prices of tomatoes and onions witnessed a downward trend during the week. Officially, there is no ban on export of perishable items.

`The ECC after detailed discussion constituted a subcommittee headed by the finance minister to consider monthly projections regarding export of perishable commodities on the basis of estimated production, consumption and surplus to be presented by the commerce ministry. It was decided that decision to export above-mentioned vegetables will be taken by the subcommittee,` said an official statement. The committee is expected to meet on Friday (today).

Remittances In order to avoid misuse of incentives offered to overseas Pakistanis under the National Remittance Loyalty Programme (NRLP), the ECC recommended that the option of cash redemption of reward points be offered to only those overseas Pakistani remitters who return to the country permanently.

According to a participant of the meeting, it was highlighted that cash reward to all remitters could be widely misused as market players could remit foreign exchange in Roshan Digital Account or Sohni Dharti Remittance Programme, earn reward points along with healthy return on these accounts and recycle/ send backforeign exchange abroad through currency dealers.

The cash redemption was approved by the federal cabinet at the request of Finance Minister Tarin who had `requested [the cabinet] that the decision of ECC on the NRLP be ratified with the stipulation that the points/rewards earned by the remitters may also be redeemed in cash`, according to the minutes of the cabinet meeting seen by Dawn.

Some institutions, including the State Bank, however, pointed out that such a cash facility to all remitters could also create cash flow problems.

Therefore, the ECC decided that cash redemption would be restricted to only those remitters who returned to Pakistan permanently. `However, overseas Pakistanis shall be qualiñed to avail services (such as PIA ticket, mobile phone duty payment, etc) against re demption of the accumulated point s awarde d under NRLP. The financing cost of NRLP would remain unchanged at Rs13bn,` it said.

The scheme, which was due for official launch on October 1, has been delayed due to differences among some 1(ey stakeholders even though its broad contours were approved by the prime minister on July 2 at a budgetary cost of Rs13.1bn this year.

The initiative envisages one per cent reward points on an annual remittance of up to $10,000 equivalent, 1.25pc on up to $30,000 and 1.5pc reward points on more than $30,000. A remitter of $25,000 a year will be entitled to a reward of about Rs46,575 on the basis of the points accumulated.

This means the first $10,000 in remittance will get reward points at the rate of 1pc, followed by 1.25pc for the next $15,000.

All home remittances through formal channels are eligible under the scheme, including funds received through Roshan Digital Accounts. The reward points would be available for use against PIA tickers or payment for extra luggage on its international flights. The Federal Board of Revenue would also entertain the accumulate d reward point s on duty payment on mobile phones under personal baggage, tax payment on purchase of locally manufactured vehicles or payment of duty on imported vehicles.

Likewise, the points will be redeemable against renewal of CNIC/NICOP or passport, premium payment of State Life Insurance, OPF`s school fee payment, and Utility Stores purchases.

The Ministry of National Food Security and Research presented a summary to update the ECC about cotton seed prices during the months of August and September.

The domestic prices remained above Rs5000 per 40kg threshold set by the ECC earlier, barring a couple of days due to rains.

The ECC expressed satisfaction that farmers are getting their due prices.

Taking up a request for allocation of 280,000 tonnes of wheat for the USC till December 2021, the ECC noted that 90,000 tonnes had already been provided as an interim arrangement whereas the remaining 190,000 tonnes would be provided from the stocks of Pakistan Agricultural Storage and Services Corporation (local or imported as per stock availability with Passco).

The ECC approved allocation of the remaining 190,000 tonnes for the USC to ensure smooth supply across its outlets.

The ECC also allocated 300,000 tonnes of wheat for the AJK government out of Passco`s stocks during the current financial year, including 140,000 tonnes already released as an interim arrangement.