Govt endorses move to enhance trade, political ties with Iran
Paves way for a deal between two countries’ central banks
PHOTO: AFP
ISLAMABAD:
Pakistan’s foreign ministry has endorsed plans to enhance political and business relations with Iran following the lifting of international sanctions, reveal documents available with The Express Tribune.
Bilateral relations between Pakistan and Iran were stalled due to the sanctions, and since 2011.
Pakistan’s Ministry of Foreign Affairs has now green-lighted the move, paving the way to sign a deal between the central banks of Pakistan and Iran to enhance economic relations. This disclosure was made on August 29 in a meeting of the Economic Coordination Committee (ECC) of the Cabinet.
The finance division informed the body that the SBP had made it clear that though the sanctions on Iran had been lifted Pakistani banks were mostly unable to find international banks willing to clear payments in respect of Iranian banks.
Consequently, the SBP had been in active coordination with the Central Bank of Iran (CBI) to devise a trade settlement mechanism to restore and encourage trade.
The CBI had forwarded a proposal for an alternate mechanism to settle bilateral trade transactions by entering into a bilateral banking and payment agreement between two central banks. Currently, there is no agreement between the SBP and CBI on banking cooperation.
However, a letter of content was signed by head of the banks in Islamabad during the last visit of the Iranian president. The finance division also said the SPB after reviewing the legal aspects of the bilateral agreement in terms of the SBP Act 1956 was of the view that scope for the transactions under the Banking and Payment Arrangement (BPA) was covered particularly in section 17 (15) of SBP Act, 1956.
Moreover, sub section 20 of section 17 in the SBP Act 1956 had broad scope which was also supportive under circumstances. The draft agreement had been duly vetted and cleared by Law and Justice Division and Ministry of Foreign Affairs from legal and political point of view respectively. The finance division requested for approval of the ECC of the cabinet for initiation of negotiations on agreement between the SBP and the CBI. After discussion, the ECC approved the proposal.
Published in The Express Tribune, September 6th, 2016.
Pakistan’s foreign ministry has endorsed plans to enhance political and business relations with Iran following the lifting of international sanctions, reveal documents available with The Express Tribune.
Bilateral relations between Pakistan and Iran were stalled due to the sanctions, and since 2011.
Pakistan’s Ministry of Foreign Affairs has now green-lighted the move, paving the way to sign a deal between the central banks of Pakistan and Iran to enhance economic relations. This disclosure was made on August 29 in a meeting of the Economic Coordination Committee (ECC) of the Cabinet.
The finance division informed the body that the SBP had made it clear that though the sanctions on Iran had been lifted Pakistani banks were mostly unable to find international banks willing to clear payments in respect of Iranian banks.
Consequently, the SBP had been in active coordination with the Central Bank of Iran (CBI) to devise a trade settlement mechanism to restore and encourage trade.
The CBI had forwarded a proposal for an alternate mechanism to settle bilateral trade transactions by entering into a bilateral banking and payment agreement between two central banks. Currently, there is no agreement between the SBP and CBI on banking cooperation.
However, a letter of content was signed by head of the banks in Islamabad during the last visit of the Iranian president. The finance division also said the SPB after reviewing the legal aspects of the bilateral agreement in terms of the SBP Act 1956 was of the view that scope for the transactions under the Banking and Payment Arrangement (BPA) was covered particularly in section 17 (15) of SBP Act, 1956.
Moreover, sub section 20 of section 17 in the SBP Act 1956 had broad scope which was also supportive under circumstances. The draft agreement had been duly vetted and cleared by Law and Justice Division and Ministry of Foreign Affairs from legal and political point of view respectively. The finance division requested for approval of the ECC of the cabinet for initiation of negotiations on agreement between the SBP and the CBI. After discussion, the ECC approved the proposal.
Published in The Express Tribune, September 6th, 2016.