Islamabad: A local newspaper reported that the federal government voiced fears about a private-member bill which seeks removal of exemptions available to foreign currency account holders, if passed could cause massive outflow of over $7b deposits.
In a policy statement given both by State Bank of Pakistan and Ministry of Finance to the Senate Standing Committee on Finance, both were of the view that no changes were required in foreign currency regime. This was stated by Noor Ahmed, Additional Secretary External Finance.
This statement by Ahmed was given in context to the revisions being discussed for Protection of Economic Reforms Act 1992 during the committee meeting.
Irfan Ali, Executive Director SBP said “Roughly $7 billion are currently deposited in foreign currency accounts and this is our main concern,” said Irfan Ali, executive director of the central bank.”
Saleem Mandviwalla, Chairman of Senate Standing Committee on Finance had moved this private bill last year after the government refrained from its decision to review all current laws that permitted individuals to transfer money abroad and indulge in tax evasion.
This bill was moved by Mandviwalla, after the Panamagate scandal to protect the interests of genuine foreign currency account holders and to rein in individuals who are allegedly involved in transfer of billions of dollars without any oversight.
The revisions put forth by Mandviwalla suggested that maintenance of foreign currency accounts should only be limited for commercial transaction purposes, and all other people and entities shouldn’t be allowed to maintain them as they remain a main source of tax evasion.
Data provided by SBP last year in August revealed that from 2013 to 2015 roughly $5.7b was sent abroad by Pakistani’s through their foreign currency accounts.
Ahmed said the suggested revisions weren’t compatible with the current foreign currency regime. He highlighted that there were legal complications associated for making such changes to fiscal and monetary laws via a private-member bill.
Mandviwalla invited the government to share its recommendations on this subject, which would help in ending the differences on the aforementioned issue.
In response, Secretary Finance Shahid Mahmood said that debilitations on this matter would be held with Governor, SBP and hence it would require more time from the committee in this regard.
