KARACHI: The State Bank of Pakistan (SBP) on Wednesday announced incentives for banks and exchange companies to increase remittances amid fears of lower-than-expected inflows due to the impact of coronavirus across the world.

The prevailing rate of telegraphic transfer (TT) is being increased to Saudi rial 20 on remitting $100-$200. Earlier, the limit was $200 and the amount being paid was SAR10. Since over 60pc of the remittances originate from Middle East, the amount of incentives is calculated in Saudi rials, the central bank announced in a circular.

The country’s economic managers fear the slump in global economic growth and record fall in oil prices would drastically reduce the inflow of remittances, which is the second biggest source of foreign exchange — after export proceeds. In addition, the incentive has also been extended to exchange companies.

Yields show sharp decline: The yields for all long-term instruments showed significant declines in the Pakistan Investment Bonds (PIB) auction held on Wednesday, weeks after the State Bank of Pakistan cut its policy rate by a cumulative 225 basis points.

The SBP accepted bids of Rs33.44bn for five-year bonds at 8.83 per cent, representing a fall of 216bps.

Similarly, Rs14.9bn worth of bids were accepted for 10-year PIBs at 9pc, which was down 185bps while Rs10.31bn was raised through the 15-year bond at a yield of 10.49pc. The SBP also accepted bids of Rs5.16bn for the 20-year debt instrument at 10.70pc, with yield decreasing by 110bps.

Rs20bn relief: In another press release on the same day, the SBP said that it has provided Rs20 billion as of Apr 10 to borrowers for deferment of their principal repayment.

Additional Rs1.4bn has been restructured while 5,126 applications were under process, said the statement.

Published in Dawn, April 16th, 2020