KARACHI: Pakistan’s central bank has ordered commercial banks to quarantine paper money received from health facilities, as banknotes may be spreading coronavirus, the State Bank of Pakistan (SBP) announced on Monday.
The directive comes amid an increase in the number of infections recorded in Pakistan, where the tally exceeded 900 on Tuesday.
“Instructions have been provided by the SBP to clean, disinfect, seal and quarantine all cash being collected from hospitals and clinics and to block circulation of such cash in the market,” the central bank said in a statement following a video meeting of commercial bank presidents with SBP governor Dr. Reza Baqir.
Banks need to send daily reports on cash collection from health facilities for SBP to be able to supply sufficient amounts of notes, while the collected money will be under a 15-day quarantine.
As disinfection procedures have yet to be in place, for the time being the SBP will be supplying banks with new bills.
“The cash that banks would receive from hospitals would be quarantined and disinfected. We are considering the ways to disinfect such notes and that would be done through medically approved procedures. For now, we are trying to provide new notes,” SBP spokesman Abid Qamar told Arab News on Tuesday.
As banknotes can carry bacteria or viruses from persons who have touched them, hand washing is necessary after handling money.
In Pakistan, however, it is a common habit that people lick their fingers while counting bills.
“This way of cash counting is very dangerous,” said Dr. Qaiser Sajjad, secretary general of Pakistan Medical Association (PMA) “For public awareness, it is advised that if they count banknotes, they should immediately sanitize their hands,” he told Arab News.
The central bank’s decision may reduce some of the dangers posed by the handling of money and shopkeepers say the move timely in the face of the current coronavirus outbreak.
“Though we are exercising caution while handling cash, still it remains a danger, because we don’t know which note is infected,” said Ahmed Hussain, a grocery seller.
Although the central bank has been encouraging electronic payments, cash remains dominant in Pakistan.
“We receive cash as low as Rs12 (for bread) and deal with dozens of people everyday,” bread seller Wali Muhammad said. “We know we are in danger but we can’t afford machines (for non-cash payment).”
Pakistan to 'quarantine,' disinfect banknotes collected from hospitals
https://arab.news/p7vad
Pakistan to 'quarantine,' disinfect banknotes collected from hospitals
- Directive comes amid increased virus cases as national tally exceeded 900 on Tuesday
- Central bank will supply banks with new bills as disinfection procedures are put in place
Islamabad dismisses claims about paying up to 8 percent interest on foreign loans as ‘misleading’
- Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves
- Pakistan’s total external debt, liabilities stand at $138 billion at an overall average cost of around 4 percent, ministry says
KARACHI: Pakistan’s finance ministry on Sunday dismissed as “misleading” claims that the country is paying up to 8 percent interest on external loans, saying the overall average cost of external public debt is approximately 4 percent.
Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves, driven largely by a narrow tax base, chronic trade deficits, rising debt-servicing costs and repeated balance-of-payments pressures.
Over the decades, successive governments have turned to multilateral and bilateral lenders, including the International Monetary Fund, the World Bank and the Asian Development Bank, to support budgetary needs and shore up foreign exchange reserves.
The finance ministry on Sunday issued a clarification in response to a “recent press commentary” regarding the country’s external debt position and associated interest payments, and said the figures required contextual explanation to ensure accurate understanding of Pakistan’s external debt profile.
“Pakistan’s total external debt and liabilities currently stand at $138 billion. This figure, however, encompasses a broad range of obligations, including public and publicly guaranteed debt, debt of Public Sector Enterprises (both guaranteed and non-guaranteed), bank borrowings, private-sector external debt, and intercompany liabilities to direct investors. It is therefore important to distinguish this aggregate figure from External Public (Government) Debt, which amounts to approximately $92 billion,” it said.
“Of the total External Public Debt, nearly 75 percent comprises concessional and long-term financing obtained from multilateral institutions (excluding the IMF) and bilateral development partners. Only about 7 percent of this debt consists of commercial loans, while another 7 percent relates to long-term Eurobonds. In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8 percent’ is misleading.
The overall average cost of External Public Debt is approximately 4 percent, reflecting the predominantly concessional nature of the borrowing portfolio.”
With respect to interest payments, public external debt interest outflows increased from $1.99 billion in Fiscal Year (FY) 2022 to $3.59 billion in FY2025, representing an increase of 80.4 percent, not 84 percent as reported. In absolute terms, interest payments rose by $1.60 billion over this period, not $1.67 billion, it said.
According to the State Bank of Pakistan’s records, Pakistan’s total debt servicing payments to specific creditors during the period under reference were as follows: the IMF received $1.50 billion, of which $580 million constituted interest; Naya Pakistan Certificates payments totaled $1.56 billion, including $94 million in interest; the Asian Development Bank received $1.54 billion, including $615 million in interest; the World Bank received $1.25 billion, including $419 million in interest; and external commercial loans amounted to nearly $3 billion, of which $327 million represented interest payments.
“While interest payments have increased in absolute terms, this rise cannot be attributed solely to an expansion in the debt stock,” the ministry said. “Although the overall debt stock has increased slightly since FY2022, the additional inflows have primarily originated from concessional multilateral sources and the IMF’s Extended Fund Facility (EFF) under the ongoing IMF-supported program.”
Pakistan secured a $7 billion IMF bailout in Sept. 2024 as part of Prime Minister Shehbaz Sharif’s efforts to stabilize the South Asian economy that narrowly averted a default in 2023. The government has since been making efforts to boost trade and bring in foreign investment to consolidate recovery.
“It is also important to note that the increase in interest payments reflects prevailing global interest rate dynamics. In response to the inflation surge of 2021–22, the US Federal Reserve raised the federal funds rate from 0.75-1.00 percent in May 2022 to 5.25–5.50 percent by July 2023. Although rates have since moderated to around 3.75 percent, they remain significantly higher than 2022 levels,” the finance ministry said.
“The government remains committed to prudent debt management, transparency, and the continued strengthening of Pakistan’s macroeconomic stability,” it added.
