The State Bank of Pakistan (SBP) has lifted the moratorium on banks for making advance payments of up to $10,000 on behalf of exporters for the import of raw material, accessories and spares.
“The SBP has allowed authorised dealers to effect advance payments up to $10,000 per invoice on behalf of importers-cum-exporters for import of raw material, accessories and spares,” the central bank said in a statement issued on Tuesday. The decision had been taken with the aim of boosting exports and generating economic activity through industrial units desiring to import spares and raw material for the export of finished goods, it said.
Earlier in July 2018, the SBP had restricted banks from making advance payments.
A dealer recalled that banks had been barred from making advance payments following complaints that the facility was being misused by smugglers and money launderers.
“Many people involved in illegal cross-border trade, especially in the neighbouring landlocked Afghanistan, were misusing the facility of advance payment,” he pointed out. “The moratorium on advance payment was placed at a time when Pakistan’s foreign currency reserves were depleting fast.”
The moratorium raised the cost and time of imports for the exporters, he added.
Published in The Express Tribune, January 2nd, 2019.
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