There has been a consistent, significant outflow of dollars from Pakistan to Afghanistan ever since the US froze the war-ravaged country’s reserves following the Taliban takeover in summer last year. Malik Bostan, the chairman of the Exchange Companies Association of Pakistan (ECAP) at a news conference said every month, about $2 billion goes to Afghanistan from Pakistan in the form of official and unofficial trade, misuse of Afghan transit trade, smuggling and through the borders, all of which are burdening Pakistan’s foreign exchange reserves.
The association has said that the large-scale, illegal outflow of the greenback to Afghanistan, along with other much-discussed factors such as the trade and current account deficits and diminishing multilateral and bilateral inflows, has eroded Pakistan’s foreign currency reserves. The unhindered flow of the American currency to Afghanistan has created a crisis for Pakistan, the association officials said at a presser.
According to them, in addition to US sanctions on the Taliban regime, Kabul’s directions to its citizens to convert their large Pakistani rupee holdings into dollars or other foreign currencies had ramped up the greenback’s flow towards Afghanistan in recent months.
According to Ecap, Afghans were no longer allowed to keep more than half a million worth of Pakistani currency, and any person found in violation of this order would be tried under the anti-money laundering laws.
That the State Bank restriction limiting the annual personal foreign exchange allowance to $6,000 for travellers hasn’t succeeded in arresting this illegal flow of foreign exchange underlines the corruption and weaknesses that define Customs control at the Pak-Afghan border. Surprisingly, no administrative measure adopted over the last one year to stop dollar smuggling across the country’s western frontier has produced the desired results, barring the occasional arrest for attempting to take out the hard currency in large amounts.
Finance Minister Ishaq Dar has also admitted that dollars are being smuggled to the neighbouring countries which should be stopped. Here the question arises that when the finance minister is saying the smuggling needs to be stopped despite being in power. Who is he asking to stop? Is it not the responsibility of the government to stop the dollars flight?
