SBP Does Not Permit Purchase of Property Outside Pakistan

Ashraf M Wartha, the governor of State Bank of Pakistan (SBP) has informed the National Assembly Standing Committee on Finance that the central bank of Pakistan has never allowed anyone to buy properties at Dubai. He stated that billions of dollars might have been extracted by people through informal channels such as Pakistan Economic Reform Act and Hundi/Hawala.

PTI MNA, Asad Umar told that Pakistanis have invested $6.6 billion for the purpose of purchasing properties at Dubai. He used Dubai’s land authorities report as a source for this information. He also put seven questions in front of the concerned departments such as FBR, SBP, and FIA regarding the steps taken by them to launder money outside the country and for purchasing properties outside Pakistan through tax-evaded money.

The meeting was held by the NA committee at the PIPS (Pakistan Institute for Parliamentary Services) building under the chairmanship of Qaiser Sheikh. In the meeting that took place on Wednesday, SBP Governor told that the bank never granted the purchase of properties outside Pakistan. He also shared that in any case, the bank will not act as an investigation agency as the SBP Act has been very straightforward in defining the role of bank. The governor told that the money has been taken outside of Pakistan through informal channels.

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PTI leader, Asad Umar carried out great efforts to write a letter to the FIA in order to obtain information about the steps taken by the law enforcement departments against tax evaders and people who purchase properties outside Pakistan.

Chairman of the NA Committee said that the letter will be sent to FIA after he seeks legal advice over the issue.

It was told by the senior members of the finance ministry that they too, had sent a letter to the FBR regarding the same information but they didn’t get a reply up till now. Asad Umar told the committee that he asked seven questions from the departments on December 1, 2016 and not even one of them has been answered.

Subsidy for Farmers

On the other hand, the NA panel requested the government to provide subsidies for small farmers. The requested amount was supposed to be equal to the amount the fertilizers companies enjoy on LNG supply. Actually, this request was brought to surface by Asad Umar who argued that big farmers were enjoying a great amount of money in the name of subsidy while small farmers were not getting their necessary benefits.

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Increase in Mark-up

Before this request, the committee also discussed the issue of markup. The markup charged to small farmers was 13.5 percent on average while it was only 5 to 6 percent for industrialists.

SBP governor told that as the disbursement remained Rs336 billion for the past three years, the agricultural loan of the country got doubled. The disbursement has now reached to Rs700 billion. He also said that there was a decrease in the spread between lending and deposit rates as they went down to 3.5 percent as compared to the earlier spread of 5.45 percent. The governor told that small loans for farmers actually cost more than the usual loans.

SBP workers told that the main cause for higher interest rates in the agricultural field was due to the (Zarai-Tarqiati Bank Limited) ZTBL as the average loans of the bank reached 14 percent. On the other hand, ZTBL workers told that the bank has now opened almost 112 new branches and the main operation of these branches will be almost similar to micro-financing. They said that the bank has a ratio of 70:30 for operations and supporting its staff.

Tariq Bajwa, the Secretary Finance said that there has been a decrease in the markups by ZTBL and National Bank of Pakistan. The decrease in markups was estimated to be 1 and 2 percent respectively. He also said that the ZTBL restructuring plan will aid in reducing the unjustified markups faced by the agriculture field as the markups for the sector have rose to 13.5 percent.

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Pak-Iran Agreement

SBP Governor also told that the draft of bilateral agreement with Iran’s central bank was recently approved by the federal cabinet. From now onwards, every country will use its own currency to settle claims while remaining issues will be settled using either Euro or Yen. The agreement is still on hold as the officials of the cabinet meeting haven’t agreed for the deal. Once the agreement is done, the formal agreement will be signed and bilateral trade will be established between Pakistan and Iran.

Source: The News

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