Pakistan is losing US Dollars on the fly and smuggling through the Afghan transit trade is making it worse.
Chairman of the Exchange Companies Association of Pakistan (ECAP) Malik Bostan said at a news conference that around $2 billion is transferred from Pakistan to Afghanistan each month through formal/informal channels, misuse of Afghan transit trade, smuggling, and border crossings, all of which deplete Pakistan’s forex reserves.
He said, “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”.
Bostan said the informal Afghan transit trade is causing tremendous damage to Pakistan’s economy. A large portion of the money traveling from Pakistan to Afghanistan is routed through the region, and both Afghan and Pakistani traders are engaged in this unwholesome activity.
He noted that the hundi/hawala business went up after the government imposed big duties on luxury goods to curb the import bill, adding that the network is vast and accepts payments via informal channels in Dubai, London, Europe, America, Saudi Arabia, and elsewhere.
He said, “Our traders and importers thought that why should they pay a 200 percent duty to the Pakistani government.”
They bring their goods here in small trucks from Pakistan to Afghanistan and back. Numerous Pakistani importers who engage in this heinous practice not only fail to pay import duties but also prevent dollars from entering the country, he added.
When the Afghan Taliban took over in August 2021, the PKR stood at 155, forex reserves at $22 billion, and the import bill was $4.5 billion. Bostan pointed out that since then, the rupee has fallen to nearly 225 per dollar in the interbank market and 235 per dollar in the free market today.
Regarding remittances, Bostan said Pakistan used to get around $3 billion from ex-pats every month, but now that number has dropped to $2 billion. “Where does this monthly $1 billion go? Because we are paying remittances at 225 rupees for every dollar, this $1 billion per month has become the sight of Afghan transit. The hawala/hundi operators are giving those 270 for every dollar,” he added.
Bostan was critical of how few money transfer agreements had been signed by local exchange companies with major international entities and said the State Bank of Pakistan (SBP) has been asked to allow partnerships with at least 50 major firms from around the world.
He said that exchange firms provided about $3 billion to Pakistani banks last year by forfeiting foreign currencies in the local interbank pool which contributed greatly to forex reserves, the PKR, and the economy.
The ECAP chief remarked that if the government allows exchange companies to engage 50 international money transfer companies, they could bring $7-8 billion to Pakistan every year.
Pata nhi kis bewaqoof ny zaat ky tailee ko ECAP ka chairman bnaya hy. Educated log mar gy thy kis? Isy ye pata hy ky 2billion afghan ja raha hy ye nhi pata govt my kon ye sab krwa raha hy? Jahil ny sab ki apny jesa samjha raka hy
We all know about this smuggling of USD, but the govt. has been sleeping for the last few years. With incompetence like this, who needs enemies!