“Some $25 million are flowing out of the country in briefcases through Karachi, Lahore and Islamabad airports,” says Governor SBP Yaseen Anwar.PHOTO: EXPRESS/FILE
“Some $25 million are flowing out of the country in briefcases through Karachi, Lahore and Islamabad airports,” said Anwar on Tuesday while recording a testimony on reasons behind the massive devaluation of local currency against the US currency in front of the Senate Standing Committee on Finance.
Awami National Party’s Senator Haji Adeel had flagged the issues of smuggling of dollars and money laundering.
The amount that is annually smuggled out of the country is far larger than what the country will borrow from the IMF under a three-year $6.7 billion bailout package. The capital flight through illegal channels speaks volumes about the country’s administrative and governance affairs and underscores the presence of smugglers, drug barons and existence of a huge black economy.
According to country’s leading expert in narco-terrorism and the global heroin economy, Dr Ikramul Haq, large parts of the black market needs are met from the proceeds of the drug dealings. He said the drug racketeers were using Dalbandin-Iran-Turkey route to supply drugs to Europe and were bringing in cash, luxury goods and arms into the country.
Dr Haq further explained that this cash was then sold in black markets and those who wanted to whiten these funds converted the rupee into dollars, which were then shifted to safe havens via Dubai. He said the Federal Investigation Agency (FIA) officials, posted at the airports, were also involved in this dirty business.
Dr Haq said drug barons also remitted their money through banking channels and the Pakistani authorities did not even ask questions about the source of remittances. He further disclosed that counterfeit dollars were also available in Pakistani markets.
Dr Haq’s statement on dirty drug money being used appeared to carry weight as the total formal flows were not even sufficient to finance annual import bill. The country is receiving about $14 billion in remittances and another over $25 billion in export receipts. As against about $40 billion receipts, the total annual import bill is over $44 billion. The difference is bridged either from SBP reserves and borrowings from international lenders.
The SBP governor said that the central bank was trying to control the smuggling of dollars and would soon sign a memorandum of understanding with the FIA. He also said that reports of suspicious transactions were monitored regularly.
“People from the US treasury come every month to monitor transactions, but they cannot pick anything except some transactions taking place at Chamman and FATA,” Anwar said.
He said there were flaws of enforcement and convictions in the country’s anti money laundering laws and to plug these amendments were proposed in anti terrorism act.
In last few days, the rupee significantly shed its value against the US dollar, putting a question mark on the role of the SBP. Anwar disclosed that Finance Minister Ishaq Dar was in touch with him when the rupee was depreciating – a statement that confirmed that the SBP did not enjoy operational independence.
“We intervened in the market by taking certain steps , apart from other measures that were taken,” the governor disclosed in response to a question whether the SBP used foreign currency reserves.
The committee chairperson Nasreen Jalil said SBP could not satisfy the parliamentary panel and its performance remained poor.
“When the currency is attacked no central bank can control the damage,” the governor insisted.
Published in The Express Tribune, October 2nd, 2013.
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@ Observer But how can the constantly widening current account deficit be reduced to the desirable level when the successive increases in the electricity tariff and petrol prices has almost wiped out the comparative advantage of our exports. Merely by increase in home remittances and IMF loans stable exchange rate cannot be achieved.
$25 million is a random figure- what is more damaging are the reckless macr-economic policies of the government: massive fiscal deficits financed by an exponential growth in money suppy. Why does the SBP Governor not talk about this?
Is it any surprise that we have a huge balance of payments problem and have to keep running to the IMF to bail us out?
The same news appeared in Dawn http://tribune.com.pk/story/611994/dollar-flight-sbp-chief-spills-the-beans/
It states ;At the committee meeting presided over by Senator Nasrin Jalil of MQM, Usman Saifullah Khan and Sughra Imam of PPP wanted to know the reason behind Prime Minister Nawaz Sharif’s recent meeting with Hungarian-American billionaire George Soros who they alleged was one of the leading global currency speculators and had played havoc with Southeast Asian economies in the 1990s. “We should also know who advised the prime minister for this meeting,” Senator Saifullah said.
Why do you hide things against Nawaz ET? The shame of it!
daily hundreds of khaypees flew out of international airports custom officers know them by names they meet each other every day in and out of country these khaypees are loaded with US $ , Euro ,£ you name it and they got it . Deals been done prior to arrival at the airport , I dont see a sole who is interested in future of beloved Pakistan evey one of us is selling the country . Pakistan say zinda Bhag .
No earth-shaking disclosure, not a new phenomenon. But the BIG question is what are the authorities doing to STOP it? Custom officials continuously harass labourers and working class with impunity but are hand-in-glove with the looters.
With 5 years of loot and plunder of the national exchequer which apparently is still continuing ........... what does one expect. It is time for the people to realise that all our leaders over many years, have betrayed us.
@malik: A fixed rate of exchange means additional pressure on the central bank to maintain its relative parity with other currencies and that presages a bankruptcy. This invariably takes place imports exceed exports and when markets are devoid of means and measures to raise finances and taxes are not paid. Pakistan's financial market is without depth and investment avenues are mainly in shares, realty, gold, currencies, and other investments. What the SBP Governor said is nothing new but he has courageously come out and spilled the beans. This is just letting out steam. What good will come out of it in the absence of juridical administration.......let's see. Salams
If the system is corrupt whatever measure you take,it will not do the remedy.If FIA is involve in the smuggling of 25 million $ each day there would also be some higher up authority involcve in the dirty business. Should somebody take action against them??/
when money launderers are in government then we cant expect anything else.
Governance, Transparency, Austerity....please do not burden the tax payers and overseas Pakistanis with any new bureacratic processes just because there is a big question mark on some of the govt departments
@Observer: Actually it is fixed like LIBOR & gold-fixing.
US can print paper and buy oil from that. This is how neo-imperialism works, there is no market price discovery in this crony capitalism.
Sad fact is this keeps third world country poor and subservient.
@malik:
"If Afghanistan has a fixed rate to dollar @ 52 why cant we do that. At this rate we will keep on losing Rs. 10 every year to the dollar and in year 2020 it will be around 200. "
The exchange rate can't be artificially fixed in the long term. The true exchange rate is a function of the country's account deficits. That is if you spend more than you make, your promissory note is not worth much, is it?
Dubai has replaced Switzerland where illegal money from poor countries and criminal fugitives take refuge. UN must act against these countries (no matter big or tiny) as they kill the ability of poor countries to overcome corruption and achieve human development goals.
If Afghanistan has a fixed rate to dollar @ 52 why cant we do that. At this rate we will keep on losing Rs. 10 every year to the dollar and in year 2020 it will be around 200.
reduce the deficit and govt spending