Despite official foreign currency reserves falling to a critically low level of $6.7 billion, the government has failed to stop the smuggling of the dollars to Afghanistan that was underway using orange crates and with the connivance of law enforcement agencies (LEAs), revealed the proceedings of a huddle held on Friday.
It also emerged during a meeting that the Customs Act was not in conformity with the new limits set for outbound currency flow, hampering the registration of criminal cases against the smugglers.
The heads of the LEAs were called by Finance Minister Ishaq Dar to Q-Block in the Pakistan Secretariat amid the state’s failure to guard its borders and international airports that have been turned into dens of smuggling.
Dar chaired an inter-ministerial huddle to review as to why the LEAs had failed to stop the smuggling of the US currency, imported wheat and fertiliser to Afghanistan.
Law Minister Azam Nazeer Tarar; PM’s aides Tariq Bajwa and Tariq Pasha; State Bank of Pakistan governor; finance and interior secretaries; Federal Board of Revenue (FBR) chairman; directors general of the Federal Investigation Agency (FIA) and Intelligence and Investigation (I&I) Customs as well as senior officers from the Finance Division and intelligence agencies also participated in the meeting, according to a statement issued by the finance ministry.
It emerged during the meeting that US dollars were being smuggled to Afghanistan through orange crates.
The government officials disclosed that disabled persons and the personnel of the LEAs were also involved in currency smuggling to Afghanistan.
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However, the more worrisome aspect was that there was no clear roadmap on how to address this crisis.
The statement read that Dar emphasised the relevant authorities to devise a robust and proactive roadmap to curb the cross-border smuggling of various items in order to bring economic and financial stability to the country.
Pakistan’s gross official foreign exchange reserves dipped to a four-year low level of $6.7 billion as of last week, sufficient to finance only five weeks of imports and not enough to meet the country’s $8.5 billion external debt repayment needs for January-March 2023.
Last month, the central bank lowered the outbound flow of the currency to $5,000 per person.
However, the Customs Act was not accordingly amended that still mentioned the $10,000 limit.
As a result, the Customs authorities cannot register criminal cases against the smugglers and their actions are only limited to the seizure of the currency.
The Customs authorities nabbed a person at Islamabad airport carrying abroad Saudi currency equivalent to $6,500. However, he had to be set free as the Customs law does not permit criminal cases below $10,000, according to the officials.
In recent months, the Customs authorities made about 100 seizures involving foreign currency equivalent to $4.2 million.
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At the Torkham border, a policeman was caught by the Frontier Constabulary enabling smuggling of $50,000.
The maximum single seizure by Customs was $30,000 and the man was arrested.
The sources said the finance minister expressed his displeasure over the FIA and other LEAs' inability to stop the smuggling.
It was discussed in the meeting that the FIA had to take severe measures as were made to dismantle the Khanani and Kalia network, according to the officials.
Dar urged the LEAs to catch “big fish” instead of focusing on smaller ones.
The sources said that one serious problem was the involvement of the LEAs in the smuggling of the currency, particularly at the airports.
The authorities have so far failed to break the network.
The participants of the meeting also discussed the role of the foreign exchange dealers in the smuggling but they remained short of coming up with concrete measures to force them to behave.
The finance ministry stated that the meeting discussed and reviewed the economic situation as well as the current mechanism for preventing the smuggling of foreign currency, wheat and urea.
Various measures were discussed in order to strengthen the anti-smuggling regime.
The finance minister, highlighting the economic situation in the country, stressed the need for coordination among all the necessary platforms for this purpose, the statement added.
It further read that the meeting would be reconvened next week once the LEAs had a clear roadmap for dealing with the menace of smuggling.
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