The government is planning to abolish the Protection of Economic Reforms Act (PERA) 1992, which grants immunity to the residents of Pakistan from an inquiry against foreign currency remittances sent through international banking channels.
According to sources, discussions are currently underway and the legislation is highly likely to be revoked. The authorities are planning to scrap PERA 1992 while launching the tax amnesty scheme in the coming days.
PERA 1992 was introduced to encourage foreign remittances, but the immunity it provides has been exploited by the country’s business community to whiten their undocumented assets.
While the abolition of PERA 1992 may not be welcomed by many in the business community, it has been requested by several finance experts.
According to the former secretary finance Dr. Waqar Masood Khan, the law gives an unfair opportunity to residents to keep a foreign currency account and deposit, maintain, and remit foreign currency through this channel.
“This is a standing scheme for a flight of capital and occasional source of balance of payments problems. Residents can buy dollars from money changers and deposit them in their FCAs,” he said.
He deemed this ‘dollarization’ a contributor to forex shortages, especially when the country is facing an external account problem.
A few experts say that the complete abolition of PERA 1992 will also affect regular citizens who want to transfer cash in and out of Pakistan.