Pakistan looks to citizens overseas to pump up its forex reserves

Eight domestic banks will facilitate opening the accounts, which will accept deposits in either US dollars or Pakistani rupees
Pakistan is moving a step closer to raising funds from its citizens living overseas through bonds or deposits, as the country’s central bank seeks to tap a new pool of savings to boost foreign exchange reserves.

The plan involves allowing non-resident Pakistanis to open digital accounts starting next week to allow the diaspora to invest in one of Asia’s best-performing stock markets, buy government debt and conduct basic banking services, State Bank of Pakistan Governor Reza Baqir said in an interview. Eight domestic banks will facilitate opening the accounts, which will accept deposits in either US dollars or Pakistani rupees.

“Pakistan has a large diaspora. Most of these are outside the financial system,” Baqir said Tuesday. “We are one of the few countries in the region who have provided this digital on-boarding of the diaspora.”

Remittances from about nine million Pakistanis living abroad is crucial for the foreign capital-hungry South Asian economy, with inflows of $23 billion last year surpassing the nation’s exports earnings of $21 billion in the 12 months ended June. The digital accounts are aimed at boosting those flows. Attracting funds from overseas citizens through bond sales or deposits isn’t unique to Pakistan. India used the option in 2013, when a discounted swap window lured inflows of about $34 billion. Overseas Indians were also tapped in 1998 and 2000 to ease pressure on the rupee.

In Pakistan, Baqir’s appointment as central bank governor in 2019 helped to spur interest from global investors into the nation’s previously little known local-currency bonds market. Prior to his current role, he served in senior positions at the International Monetary Fund for 18 years.


Senate rejects 2 FATF-linked Bills

Pakistan’s Opposition-dominated Senate has rejected two Bills related to tough conditions set by the Financial Action Task Force (FATF), jeopardising the government's efforts to escape from being blacklisted by the global money laundering and terrorist financing watchdog.

The move drew a strong reaction from Prime Minister Imran Khan (pictured), who accused the Opposition leaders of trying to save their illegal money. 

The Anti-Money Laundering (Second Amendment) Bill and the Islamabad Capital Territory (ICT) Waqf Properties Bill, passed by the National Assembly a day before, were rejected through a voice vote by the Senate on Tuesday.

The legislations were part of efforts by Pakistan to move from the FATF’S grey list to the white list. PTI

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