The State Bank of Pakistan (SBP) is adding more red tape to curb the continued depletion of foreign currency reserves.
The central bank has notified all the banks that the importers will have to inform SBP in advance about the requirement of US dollar for import payments. The importers will submit the request a day before the amount is needed and will have to fill out a form as well.
Pakistan’s forex reserves have depleted at the fastest pace in Asia in the recent years. The country devalued the currency three times to bridge the gap between exports and imports. However, it was of no use as the imports continued to grow and the dollar’s value crossed the 120-rupee mark.
As per a report by the International Monetary Fund (IMF), Pakistan saw a decrease of 34% in its forex reserves in the last 12 months. In comparison, Azerbaijan’s decreased by 8%, Kazakhstan’s 6%, Fiji’s 6%, and Bangladesh’s reserves saw a decline of 4%.
South Asia’s second largest currency will need another bailout from the IMF, however, the upcoming government can give the final approval. The country is also making a slow switch towards transactions involving the Yuan currency. The SBP recently allowed China to open yuan accounts of local banks and Gandhara Nissan also recently started to make import payments in yuan.
Pakistan was recently put on the grey list of terrorism-financing by the Financial Action Task Force (FATF). In that regard, the finance ministry will upgrade the system to monitor the cash inflows and outflows. The finance minister added that the systems at borders and ports need to be upgraded as well to restrict smuggling.