Government rushes to forge banking ties with Iran

Plans to hold talks with officials of Iranian central bank

ISLAMABAD: Pakistan is eagerly taking necessary steps to forge banking links with Iran after the recent lifting of years-long sanctions under a deal between Tehran and world powers.

Like many other countries, Pakistan has also badly suffered from the difficulties posed by the absence of a payment mechanism with Iran due to the international restrictions in response to the nuclear programme allegedly pursued by Tehran.



Talking to The Express Tribune, a senior officer in the Ministry of Commerce said the ministry was making preparations for opening banking channels in Iran. In this regard, the ministry will soon hold a meeting with officials of the State Bank of Pakistan as in the past all commercial banks were reluctant to open their branches in Iran.

“We hope that all formalities will be completed by next week and we will also engage in talks with the central bank authorities of Iran,” said the officer.

Bilateral trade, which was nearing $1 billion earlier, had fallen drastically as a result of international sanctions and unwillingness on the part of banks to finance commerce.

Export of two major products from Pakistan - kinnow and rice - also dropped sharply, though some informal border trade continued between businessmen of the two countries.

The officer said the Ministry of Commerce, in consultation with the Iranian authorities, had already designed a five-year trade and investment plan soon after the decision by major powers in July last year to lift the Tehran embargo.



“Implementation of this bilateral trade strategy will start immediately after the opening of bank branches in Iran,” the officer said, adding this would pave the way for major business and investment partnerships between the two sides.

Meeting with Iranian envoy

In a meeting with new Iranian Ambassador Mehdi Honardost on Tuesday, Commerce Minister Khurram Dastgir Khan pointed out that Pakistan was interested in negotiating a free trade agreement with Iran and a draft of the proposed accord would be presented as soon as Tehran expressed its willingness.

He suggested that the next step after a preferential trade agreement was the free trade deal and Pakistan could not find a better time to start talks than right after the removal of curbs.

Dastgir said banking sectors of the two countries would forge active linkages within weeks to facilitate the traders in channeling their payments.

Speaking about tariff revisions by Iran, Dastgir stressed that there should be more predictability in tariffs on Pakistan’s agricultural products.



Iranian duties on agriculture fluctuated widely ranging from on-seasonal highs to off-seasonal lows. The two sides needed to agree on sanitary and phyto-sanitary standards as these proved to be an unwanted barrier to bilateral trade, he said.

Published in The Express Tribune, January 20^th, 2016.

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