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SBP Policy Negatively Affected Trade With Afghanistan and Central Asian Countries

Trade with Afghanistan and the Central Asian Republic has been badly affected due to policy revision by the State Bank of Pakistan.

Chairman (Pakistan-Afghanistan Joint Chamber of Commerce and Industry) PAJCCI, Zubair Motiwala, has requested an urgent meeting with the Minister of Finance and Governor State Bank of Pakistan to discuss the issue of declining trade with Afghanistan as a result of the recent change in policy and to explore innovative solutions while adhering to international conditions imposed by FATF and other global entities.

The business community from both sides has shared their concerns regarding the non-issuance of E-Form and EIF, halting both exports and imports, thereby creating congestion at borders due to the non-clearance of trucks as a result of restrictive banking policies. It may be noted that EIF is also not being issued for two months, even for CARs.

The traders demand abolishing the requirement of the said documents till an appropriate procedure may be devised, as non-issuance of these forms lead to the decline of transactions by WeBoC, halting consignments and also affecting refund requests made by the traders. The sectors that are churning major revenues for Pakistan, like coal, cement, soapstone, and other consumables, are facing the hit and uncertain to reap benefits from the recent opening with CARs.

Zubair Motiwala, in his recent meeting, also apprised the Advisor on Commerce & Industry on high impact issues like developing a formal mechanism for barter trade, facilitating trade in PKR, withdrawal of Cash on the Counter facility, the requirement of advance payments, the reluctance of correspondence banks to accept third party payment in case of Afghanistan and the congestion at border resulting due to delayed checking and payment issues raised due to SBP’s change in policy.

Chairman PAJCCI also urged setting up bank counters at borders so payments can be made at the spot without delaying shipments and creating congestion.

It is public knowledge that at present Afghanistan has no operational banking or USD reserves, traders cannot bring more than PKR 10,000 while crossing borders while consignment values are way higher than the allowable limit of cash-carrying. In case payments are made in USD, traders will eventually buy them in Pakistan hence impacting Pakistan’s Foreign reserves and USD crunch in the local market. Traders cannot bring USD from Afghanistan due to unavailability, and additionally, the Afghan government has restricted USD movement.

PAJCCI also demanded that Pakistan should and must take all measures to become the reliable and dependent trade, economic and social partner of Afghanistan, and not leave a trade gap that can be filled by hostile elements and give rise to illegal means. This will also have a ripple effect on trading with Central Asia, where a number of consignments are stuck at the border due to payment confusion.

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Published by
Abdul Rahman