SIFC pushes SBP, FBR to curb grey currency market

The Special Investment Facilitation Council (SIFC) has directed the State Bank of Pakistan (SBP) and the Federal Board of Revenue (FBR) to curb the grey currency market by enhancing the flow of foreign exchange through official channels. 

News reports suggest that the SBP governor has been tasked with reviewing the factors contributing to the flow of foreign exchange through informal channels and collaborating with the FBR and finance ministry to address them.

Media reports indicate that the grey market has reemerged after a period of strict administrative controls, reportedly offering higher rates for the dollar compared to the open market. 

In response, the finance secretary has been instructed to form a working group with key officials to restore the Cash Over Counter Facility at National Bank of Pakistan branches, particularly at border crossings.

The SBP, in collaboration with the Ministry of Information, has also been asked to launch a nationwide campaign to discourage the use of informal channels and highlight the benefits of formal banking routes for remittances. 

Furthermore, the SBP and the Public Private Partnership Authority (P3A) will conduct a third-party study to evaluate the current inflow and outflow of foreign exchange and explore mechanisms to securitise remittances.

The Executive Committee of the SIFC recently made these decisions, which have been communicated to relevant stakeholders for swift implementation. 

The SIFC also emphasised the need for a comprehensive restructuring of the FBR, including the reconstitution of the federal policy board, separation of Customs and Inland Revenue operations, and the establishment of oversight boards for each. 

The council instructed the FBR to develop a milestone-based action plan for the digitalisation and restructuring of its operations, aiming to increase the tax-to-GDP ratio from the current 8.5% to 18% by 2029.