KARACHI – With a sizeable chunk of the cash-strapped government’s revenues draining out to foreign lenders in the face of debt servicing, the country’s money exchangers claim to have the potential to rid Islamabad of the burden amounting to billions of dollars. In this regard, money exchange companies are due to hold an important meeting with Governor State Bank of Pakistan Shahid H Kardar tomorrow on April 8 to discuss ways and means to increase the country’s foreign exchange reserves to an extent that it breaks the so-called begging bowl.
According to local money exchangers, Pakistan is currently paying an annual interest, aggregating at least to $5.0 billion, on over $55 billion owed from various bilateral and multilateral international loaning agencies.
“We can increase Pakistan’s annual foreign exchange reserves by $6.0 billion by surrendering Rs 500 million every month in the inter bank,” Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan told Pakistan Today on Wednesday. “We can rid Pakistan of the backbreaking foreign debts,” Bostan went on to claim.
But to achieve this goal, money exchangers demand certain incentives from the regulator, namely the State Bank of Pakistan. According to ECAP chief, the State Bank would have to provide exchange firms with a banks-like 100-riyal rebate on the remittance of $100. “We would also like the regulator (SBP) to permit us to sign agreements with the foreign money transfer companies,” he said.
Bostan claimed that overseas Pakistanis were inclined to remit their money back home through international money transfer firms whose transfer fees and time was far lesser than that of the banks. “Money transfer companies deliver the remittances within two hours, while banks take at least two to three days in doing the same job,” he claimed. The money exchanger claimed that he had increased the volume of country’s foreign exchange reserves through a contribution of $225 million during last month (March 2011). “The rupee got stronger against the dollar that depreciated by one rupee to Rs 85.30 from the previous Rs 86.30,” he explained.
It is pertinent to note that during first three quarters of the current fiscal year, Pakistan’s dollar reserves have been on the higher side and stood at $17.956 billion during the week ending on March 26 – owing primarily to healthy dollar inflows on account of exports and worker remittances.
According to State Bank data, during July-February FY11, Pakistani compatriots had remitted a record $6.963 billion against $5.787 billion of the last corresponding period. Economic managers in the cash-strapped federal government, who this financial year expect to receive over $11 billion as home remittances to keep in check the country’s deterioration-prone external accounts, are striving hard to ensure that overseas Pakistanis remit their earnings thorough formal channels.
“We are scheduled to hold a meeting with the Governor State Bank on April 8 where all these issues would be discussed,” Bostan said and expressed hope that the Governor Shahid H Kardar would show the same spirit he did earlier.
The SBP governor, in January 2011, had accepted the money exchangers’ longstanding demand for lifting ban from the export of euro, ponds sterling and UAE dirham from Pakistan. The move, the ECAP chairman said, had increased the monthly contribution of money exchangers by more than 100 percent. “Previously, we used to surrender $100 million only but after the lifting of ban we surrendered $225 million in the inter-bank during March,” he said.
