Islamabad, Dec. 25 -- The International Monetary Fund has asked Pakistan to limit government spending on incentives for foreign remittances, leading to increasing concerns among analysts that a rollback could divert monetary flows to illegal hawala and hundi channels, further adding to financial woes.
The global money lender's recommendation came in a staff-level report released earlier this month following a second review of its $7bn bailout package to Islamabad.
According to a report by Nikkei Asia, economists in the country have warned that curbing these incentives risks weakening the official banking networks that have helped direct remittance flows within formal registered legal fiscal channels.
In its assessment, the IMF said that ...