KARACHI: Pakistan has made significant progress on the recommendations of the Financial Action Task Force (FATF), Dr. Reza Baqir, Pakistan’s central bank chief said on Saturday, while speaking to media at a financial crime summit in Karachi.
In October, the Paris-based terror financing watchdog, FATF, retained Pakistan on its grey-list until Feb. 2020, and warned the country could get further downgraded for failure to make progress on its 27-point action plan.
In case of an FATF black-listing, Pakistan would be heavily sanctioned which could cripple its struggling economy.
“FATF is a very important area for us and the country. We have made substantial progress in this area,” he said and added that the International Monetary Fund had also endorsed Pakistan’s progress in its report.
But with the FATF’s February deadline looming over the horizon, Pakistan faces considerable skepticism over whether announcements to crack down on money laundering and militant groups operating from its territory, have translated into real action.
The State Bank of Pakistan (SBP) governor said steps had been taken to completely eliminate trade-based money laundering and terror financing under a ‘zero tolerance policy.’
“The country has zero tolerance for terror financing. Trade based money laundering is being halted... money laundering in trade is very difficult now,” Baqir said.
“Steps are being taken to separate criminal proceedings and economic affairs through the strict monitoring of money laundering and terror financing,” he said, and added: “Pakistan’s financial system is being reformed.”
In May, with barely enough foreign exchange reserves to cover two months of exports, Pakistan reached an agreement with the IMF for a three-year, $6 billion bailout deal, as a life-line to its slowing economy. But the IMF deal came with its own set of stringent reform conditions, including the call for a market-determined, free-floating exchange rate for the rupee which led to the Pakistani currency hitting record lows against the dollar.
On Saturday, the State Bank chief defended the move and said the measures had restored the confidence of investors, attracted investment in the Pakistani rupee, encouraged savings and strengthened the foreign exchange reserve position of the country.
Foreign reserves held by the country surged to $16.04 billion during the week ending on Dec. 06, 2019 and central bank reserves increased by $121 million to $9.23 billion. The SBP also received $1.3 billion from Asian Development Bank.
The stock market has also shown positive growth as the benchmark KSE 100 index increased by 7,259 points (21.6%) during the last seven weeks-- its highest since September 2009.
Pakistan making 'substantial progress' against terror financing — SBP chief
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Pakistan making 'substantial progress' against terror financing — SBP chief
- In Oct., terror financing watchdog FATF retained Pakistan on its ‘grey-list’ until Feb. 2020
- ‘Zero tolerance policy’ for terror financing and money laundering: SBP chief
Rating firm S&P says it won’t rush Iran war downgrades, sees risks for countries like Pakistan
- Agency says it is monitoring indebted energy importers as higher oil prices strain finances
- Gulf economies seen better placed to weather shock, though Bahrain flagged as vulnerable
LONDON: S&P Global said it would not make any knee-jerk sovereign rating cuts following the outbreak of war in the Middle East, but warned on Thursday that soaring oil and gas prices were putting a number of already cash-strapped countries at risk.
The firm’s top analysts said in a webinar that the conflict, which has involved US and Israeli strikes against Iran and Iranian strikes against Israel, US bases and Gulf states, was now moving from a low- to moderate-risk scenario.
Most Gulf countries had enough fiscal buffers, however, to weather the crisis for a while, with more lowly rated Bahrain the only clear exception.
Qatar’s banking sector could also struggle if there were significant deposit outflows in reaction to the conflict, although there was no evidence of such strains at the moment, they said.
“We don’t want to jump the gun and just say things are bad,” S&P’s head global sovereign analyst, Roberto Sifon-Arevalo, said.
The longer the crisis was prolonged, though, “the more difficult it is going to be,” he added.
Sifon-Arevalo said Asia was the second-most exposed region, due to many of its countries being significant Gulf oil and gas importers.
India, Thailand and Indonesia have relatively lower reserves of oil, while the region also had already heavily indebted countries such as Pakistan, Bangladesh and Sri Lanka whose finances would be further hurt by rising energy prices.
“We are closely monitoring these (countries) to see how the credit stories evolve,” Sifon-Arevalo said.
