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KARACHI: The Exchange Companies Association of Pakistan (ECAP) on Monday confirmed what has been a well-kept secret for months that the country has been dealing with a significant outflow of US dollars to Afghanistan ever since the Taliban took control of Kabul last year.
“Pakistan is currently dealing with problems on several fronts, the political crisis being the first and biggest one. The dollar crisis is also connected with it,” said Malik Bostan, the chairman of the Exchange Companies Association of Pakistan (ECAP) at a news conference.
Mr Bostan pointed out that when the Taliban took over Kabul, one greenback was available for Rs155, and Pakistan’s reserves stood at $22 billion. Now the reserves have sunk to their lowest level in about eight years with a dollar selling for Rs225 in the inter-bank market. This unhindered flow of the American currency towards Afghanistan has created a crisis for Pakistan, he added.
According to Mr. Malik, 15,000 individuals frequently travel to the neighboring country every day, and since Islamabad has allowed each person to take $1,000 per day, 15 million dollars have been legally transferred daily from Pakistan to Afghanistan.
He claimed that the government in Kabul had ordered the conversion of all Pakistani rupees into dollars or other foreign currencies two months ago. In Kabul, it is against the law to keep more than 0.5 million Pakistani rupees, and anyone found in possession of that much money would face legal action for money laundering.
“For 42 years Afghans have been trading in PKR. They have hundreds of billions of PKR. But now they are buying dollars from Pakistan at any cost. They will siphon off the entre dollars from Pakistani markets,” Mr Bostan warned, adding that Pakistan must take up the matter with the Kabul government.
He said commercial banks are buying $120m-$130m per month from exchange companies for credit cards. These cards are legally transferring dollars from the country. However, the government has slashed the annual per card spending limit to $30,000. Earlier, there was no limit on such transaction.
“Our traders and importers thought that why should they pay a 200% duty to the Pakistani government,” Bostan said, and added they operate a global network, accepting payments through hundi/hawala in Dubai, London, Europe, America, Saudi Arabia, and everywhere else.
They bring their items here in the name of Afghan transit, travelling from our port to Afghanistan and then returning to Pakistan in small trucks. Numerous importers from Pakistan who participate in this atrocious practice not only fail to pay import duties, which costs the national exchequer billions of rupees, but also prevent dollars from entering the country, he said.
He said exchange companies currently import $3bn through export of other foreign currencies while the remittances amount to $2bn per year. “We can bring $7bn to $8bn per year if the government permits us to have agreements with 50 foreign companies for remittances compared to just 3 we currently have,” he said.