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  • Jan 24th, 2018
  • Comments Off on Forex reserves: situation quite satisfactory: SBP chief
Governor State Bank of Pakistan (SBP) Tariq Bajwa informed the Senate Standing Committee on Finance, Revenue, Economic Affairs and Narcotics Control on Tuesday that situation of foreign exchange reserves is satisfactory. The committee met here at the Parliament House with Senator Saleem Mandviwalla in the chair. The governor gave an in-camera briefing on the foreign exchange reserves of Pakistan and its impact on the economy.

After the meeting, Saleem Mandviwalla told media persons that the committee was informed that the government does not want to go to the IMF for another loan program. The senator said that the government has borrowed $4 billion from the World Bank and $2 billion from Asian Development Bank (ADB) during the current financial year. Quoting the governor''s statement, the senator said that he was talking about increasing foreign debt and no control on ever-increasing volume of imports. He said that the volume of imports is increasing and percentage of imports under the CPEC is only 16.

The parliamentary panel deferred a discussion on a private member''s bill to amend ''Protection of Economic Reforms Act, 1992 (The Protection of Economic Reforms (Amendment) Bill, 2016).'' The bill was introduced by Saleem Mandviwalla on October 3, 2016 and referred to the committee for consideration and report.

Earlier, the governor of State Bank of Pakistan informed the committee that the central bank in consultation with the Ministry of Finance has been working on the bill and he would share the details of the bill after its finalization by the Ministry of Finance. In his ruling, the chairman committee deferred the discussion on the bill till February 2018. The SBP chief also briefed the committee members about progress being made by the commercial banks regarding installation of counterfeit notes detection equipment at the cash disbursing branches.

An official of central bank briefed the committee about the currency management strategy to stop counterfeit notes in the country. He said the commercial banks have started disbursing machine authenticated banknotes of Rs 500 and above denomination in 30 cities from April 3, 2017. He said the ratio of 12 counterfeits out of one million rupees is very low. The banks have been directed that all cash should be dealt with under CCTV, so that the footage of CCTV would be available when needed, he added.

He further said that banks will issue machine authenticated banknotes of Rs 100 and above denominations across the country from July 2, 2018 and Rs 50 will be covered from January 2019.

The objective of the strategy, he said, is to bring the cash management function at par with international and regional best practices as well as ensuring that no counterfeit currency is issued by the banks. The chairman committee also suggested the SBP governor to take notice of discrepancies in cash withdrawals from Pak rupee accounts and foreign currency accounts. He revealed that the account holders of Pak rupees are paying withholding and other taxes on withdrawal of cash. However, he said the foreign currency holders are not paying any tax on the withdrawal of cash. "The government has created a parallel system for the elite and the poor, which is unjust," he said.

The governor assured the committee that the central bank has already been working on this issue. The governor also briefed the committee about the sector-wise foreign exchange remittances along with month-wise details of foreign airlines remittances under selling of tickets in Pakistan for the last two years. He said the foreign airlines had remitted $1.5 billion in two years (2015-16, 2016-17).

The chairman committee said that the foreign airlines are enjoying ''sixth freedom'' flights in Pakistan and Civil Aviation Authority (CAA) has not a check and balance over them. Quoting an example of India, he said that their foreign airlines were allowed to remit only 50 percent of their revenue. The chairman committee sought detailed data of foreign airlines working in Pakistan.

The governor said it is not unusual as the PIA is enjoying ''freedom flights'' as it carries passengers from Bangladesh and Sri Lanka and takes them to other countries. Earlier, an in-camera briefing was held by the Standard Chartered Bank, Citi Bank and Deutsche Bank of the issuance of $500 million Euro Bonds in the year 2015.

Copyright Business Recorder, 2018


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