September 22, 2019

Govt collects $30m from Pak expats under Pakistan Banao Certificate

ISLAMABAD: After receiving a lukewarm response on two main fundraising initiatives, the total amount raised of Rs10.9 billion through the Prime Minister and the Pakistan Justice Fund for the Diamer-Bhasha and Mohmand dams has been invested in the treasury bills (TB) for earning around 14 percent margin.

With respect to the second initiative in the form of Pakistan Banao Certificate (PBC) to attract investment from the Pakistani diaspora living abroad, the PTI-led government has so far raised approximately $ 30 million, so this scheme has not managed to attract the desired number of potential investors.

The special secretary of Finance and official spokesman, Umar Hameed, said that PBC is an issue without scripts that does not require any extension.

Senior officials of the State Bank of Pakistan (SBP) said about the dam fund that the total amount raised amounted to Rs10.9 billion and, under the direction of the Supreme Court of Pakistan, they were instructed to invest this amount in the Government TB through the National Bank of Pakistan (NBP). “Now the additional funds raised for the dam’s funds were invested in TB,” an official said, adding that the funds would not be used if they were inactive due to the SBP. Investment in TB is fully guaranteed and risk free, so it was decided to use this route to gain margin at a time when banks were earning good margins due to higher interest rates.

Government loans went from the central bank to commercial banks under IMF conditions, so the T-bill rate is quite attractive because the bankers also knew that the government had become a desperate borrower to finance its fiscal deficit. .

In PBC, the government had a fixed profit rate of 6.25 percent and 6.75 percent in three and five years respectively. “So far, the government had attracted around $ 30 million,” said a senior government official.

The government was unable to launch PBC abroad in the main destinations because the Ministry of Finance could not manage the required permit from the US regulatory regimes. UU., The United Kingdom and other important capitals where most Pakistanis lived.

However, sources said there has been no vigorous campaign to attract investment in PBC and nobody knows what the government was thinking to make this scheme attractive to Pakistanis abroad.

At a time when Pakistan is desperate to increase its foreign exchange reserves under the IMF condition, the PBC-like scheme could become a good source of increased dollar inflows in the coming months.

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