ISLAMABAD: In an apparent move to support foreign exchange reserves, Pakistan on Thursday decided to stop trade with Afghanistan in rupee and discourage persons going abroad from taking out foreign exchange in cash.
The decisions were taken at two back-to-back meetings, presided over by Finance Minister Ishaq Dar and heads of State Bank of Pakistan, Federal Board of Revenue, Secretaries of Commerce and Finance. Rana Assad Amin, a finance ministry spokesman and adviser, told Dawn that there were reports that unscrupulous elements were taking out foreign currency in bulk, taking advantage of central banks’ lenient view.
The governor of State Bank, Dr Yasin Anwar, told the meeting that the present limit of $10,000 for each person per trip abroad was being misused and believed that the limit be reduced by half to $5000 per person per visit. Rana said it was felt that genuine travelers never took out such a huge amount of foreign exchange in cash and instead preferred credit cards and foreign exchange bearer certificates because of the risk factor.
This meant people related to currency business might be involved in pilferage of foreign exchange. It was, therefore, decided to impose a limit of $5,000 or equivalent in other currencies per person per trip who wanted to carry currency notes. At the same time, each child up to 12 years of age would be entitled to 50 per cent allowance while an infant would be permitted an allowance of 25pc.
“Every civilised nation had its own foreign currency exchange control regime that is adjusted according to changing situation and Pakistan is no exception,” he said. Rana said Pakistan had allowed trade with Afghanistan in Pakistani currency in 2001-02 when there were no banking facilities. Now it had been felt that enough time had passed since then and both the countries have established banking channels, therefore, there was a need to introduce normal trading arrangements as is the case with the rest of the world.
He said the head of Khyber Pakhtunkhwa Chamber of Commerce and Industry Zahidullah Shinwari was also consulted on the issue who reported that they had in fact proposed to the government to shift to the normal trading system in foreign exchange. The meeting was informed that Pakistan’s export to Afghanistan during 2012-13 amounted to $2.3bn but half of this trade took place in rupee.
After consultations with the relevant ministries, the finance minister decided that payments against exports to Afghanistan would no longer be in rupee and the normal trading regime would apply from Mar 17. A two-month period was, however, allowed to exports to complete their transactions already in the pipeline. The KCCI president drew the attention of the finance minister to difficulties being faced by exporters to utilise the route of Ghulam Khan as it was restricted for export of cement only.
He suggested that other items should also be allowed to be exported through Ghulam Khan route. On being supported by the FBR chairman and the ministry of commerce, the finance minister decided to allow export of all exportable items also from Ghulam Khan, saying this would help develop business in the backward areas of KPK and also stimulate growth of exports to Afghanistan.
The relevant ministries were directed to immediately take steps for implementation of the decisions through necessary amendments in the procedures. The minister said the decision was expected to earn foreign exchange of $1bn, raise exports to Afghanistan, benefit businesses as well as the people of Khyber Pakhtunkhwa and reflect actual export figures of the country. – Dawn