DUBAI // Pakistani expatriates on low wages will not have to pay fees when they send money home, after an agreement between their government and foreign exchanges in the UAE.
Some foreign-exchange companies had warned that anyone sending more than US$100 (Dh367) might face a transaction fee of Dh15 because of a dispute with the Pakistani government over millions of dirhams in unpaid rebates from last year.
"Our members have started to receive small amounts from the overdue rebates from the Pakistan government," said a spokeswoman for the Foreign Exchange and Remittance Group (Ferg) in Dubai.
"According to our members, they have started to receive payments up to September 2011, so at the moment we will wait and see what happens."
The disagreement involves foreign exchanges that signed up to the Pakistan remittance initiative.
Under that scheme, exchanges would not charge for remittance payments and in return the government would give them rebates.
But Pakistan was behind in payments for a year, meaning exchanges were owed millions of dirhams.
"We will now have a wait-and-see-approach regarding the rebates, so there is no immediate threat of fees being imposed on people wishing to send money back home to Pakistan," the Ferg spokeswoman said.
The release of the funds was met with relief from foreign exchanges in the UAE that are a part of the initiative.
"We have started to get payments in dribs and drabs, but it will still be overdue payments stretching back a year next month so we'll see how it goes," said Syed Ahmed, the executive director for Multinet Trust Exchange in Dubai.
"Hopefully the rebates continue to come through and that way we won't have to impose the extra charges."
Foreign exchanges had warned that adding fees for remittances would drive people to send money through illegal channels.
"We will act as a group with the other Ferg members and probably give it another six months to see how things are going," Mr Ahmed said.
"There is no deadline we have set to say that we must have the outstanding rebates paid or we will impose the fees."
Remittances play a crucial role in Pakistan's economy, with US$4 billion expected to be sent from the UAE by the end of this financial year.
"The embassy raised the matter with the concerned authorities in Pakistan who have assured the embassy that the process of settling the rebates is in the pipeline and would be resolved soon," said Jamil Ahmed Khan, the Pakistani ambassador to the UAE.
Statistics reported by Ferg show Pakistan expects remittances sent from the Arabian Gulf to hit $15bn at the end of the 2012-2013 financial year.
Last financial year, expatriates in the UAE sent home $2.84bn, with those in other Gulf countries sending a record $8bn.