"It is a good move, but my apprehension is that Afghan nationals will buy dollars from Pakistani markets to pay the exporters," says ANP Senator Ilyas Bilou. PHOTO: PPI
ISLAMABAD:
The government has introduced new capital controls and halved the permissible limit of $10,000 in cash for air travellers in addition to other stringent measures at major international airports to stop the smuggling of dollars, as the country’s foreign currency reserves stand at a critically low level.
The decision was taken during a meeting among all stakeholders at the Ministry of Finance on Thursday. They also decided to discontinue a special trading regime with Afghanistan. From March 17 this year, Afghanistan will pay in dollars for imports from Pakistan compared to existing payments in Pakistani rupees.
The measures came after the government failed to buffer the fast depleting foreign currency reserves despite an International Monetary Fund (IMF) bailout package of $6.7 billion. Reserves held by the State Bank of Pakistan (SBP), estimated at $3.2 billion, can meet only three weeks of imports.
The fresh ceiling on capital outflow suggests that the government is making desperate attempts to stem the continuous depletion of foreign currency reserves, according to analysts.
SBP Governor Yaseen Anwar raised the issue in the meeting that the present limit of $10,000 for each traveller per trip was being misused, said a statement issued by the Ministry of Finance. To stop this tendency, it was agreed that the present limit should be reduced to $5,000, it added.
Apart from this, each child up to 12 years of age would be allowed to take with him up to $2,500 while an infant would be permitted to carry $1,250, according to the decision.
Last year, Yaseen Anwar had disclosed in a meeting of the Senate Standing Committee on Finance that $25 million was being smuggled out of the country every day through three major international airports.
The government also decided to plug loopholes in the system and control capital flight. It agreed that law enforcement agencies would trace the smugglers.
Afghanistan trade
The government also declared that payments for exports to Afghanistan would no longer be in Pakistani rupees and the normal trading regime would apply with effect from March 17 this year, said the Ministry of Finance. A two-month period has been given in cases where export contracts have already been signed.
Pakistan’s exports to Afghanistan amounted to $2.3 billion in 2012-13, including the trade undertaken in rupees estimated at 50% of total exports.
This was likely to help earn $1 billion in revenues, increase exports to Afghanistan, benefit the business community as well as people of Khyber-Pakhtunkhwa and reflect actual export figures, said the ministry while defending the move.
The move came in view of the fact that normal banking channels were now available for transactions between the two countries, said the ministry.
“It is a good move, but my apprehension is that Afghan nationals will buy dollars from Pakistani markets to pay the exporters,” said Senator Ilyas Bilour of the Awami National Party. He is one of the leading exporters of ghee products to Afghanistan.
In the meeting, the issue of expanding trade routes with Afghanistan was also raised by the president of Khyber-Pakhtunkhwa Chamber of Commerce and Industry. It was decided that Ghulam Khan route, which is currently restricted for cement export only, would be used for all types of exports.
Published in The Express Tribune, January 10th, 2014.
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COMMENTS (19)
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I also think that there should be no problem if you take more than 500 British pounds into the country. I think the limit is something like 10000, but I am not very sure.
Regards Rod Titan Industrial
@optimist: I did not run into trouble for bringing more than 500 British pound into the country. May be your experience or information is not correct.
@Jag Nathan: May I suggest that you keep your nose out of Pakistani affairs. Thanks I am sure your country has no problems.
Reminds me of the last days of the Soviet Union. I suggest Pakistan build more atom bombs and missiles. They make good financial sense, especially when a country is going bankrupt.
@optimist: What you are saying is a total fabrication. No one stops you from bringing any amount of money into a country. It is only when you take money out that you get stopped and that too in developing countries only. The UK's economy depends on banking and the free flow of capital so I doubt they have any restrictions like that.
If you must know we don't use electronic forms of payment here in Pakistan as much as you do in rich countries. It is very hard to send money abroad electronically and also most of our plastic cards don't work in foreign countries because Pakistan is considered a high risk country and also because our bank's IT infrastructure is backward.
@optimist:
Thats strange, because once i had 17000 pounds in cash and no one stopped me at Heathrow for that reason
all these steps are hurdles for the poor "middle class". The rich and influential donot carry few thousand dollars they just carry them in suit cases or have "charter" flights to Spain.
@optimist
That's not true. You are allowed to bring upto 10,000 Euros.
Its nothing new when NS is PM.
I think ET has made a MISTAKE...... Currently FC limit is 1,000 USD and not 10,000 and now government has reduced it to USD 500/ passenger not 5,000...
I guess the irony of depending on dollars from Afghanistan escapes everyone.
The lion of Punjab is at it again! Why nobody is surprised.
@Ahmad: I back your comment. Govt should catch big fish to show the sincerity of the action.
By the way,How much is the limit to bring in dollars?
This is a very bad decision.
Once again the ordinary citizen will be hurt and the rich will keep transferring the money through hawala.
So why not take steps to bring back stolen money from Singapore,Dubai,London and Switzerland
Here in the UK, they will stop you if you are taking or bringing more than £500 cash. . Even 5000 is too much by international standards. Why someone needs to move cash? Banks are there for this purpose if your money is earned through genuine ways.
If our great "leaders" from all major parties have some mercy on the poor people of Pakistan, and bring back their foreign assets to Pakistan, it will solve many problems for Pakistan. Everyone in the world knows that the foriegn assets they are holding, in fact, belong to the poor and kummee people of this poor country.. Perhaps, God will forgive them for this act..
Government of Pakistan doesn't need an inspector Cruiso to find out who is taking dollars abroad. Just look at politicians' properties in Dubai, France, UK & USA and you will know exactly who the real culprits are.
Sharief family will never bring back their money back home and neither will they allow Pakistanis to take away their money with them away. It reminds me days when they froze all foreign currency accounts.