KARACHI: Discussions between the Pakistani central bank and the Arab Monetary Fund (AMF), a working sub-organization of the Arab League, are underway to connect Pakistan’s Raast and the AMF-owned Buna payment systems to enable real-time, cross-border payments for overseas Pakistanis, Pakistani central bank officials said on Tuesday.
Raast is Pakistan’s first instant payment system that enables end-to-end digital payments among individuals, businesses and government entities. The state-of-the-art system is being used to settle small-value retail payments in real time.
Buna, which is operated by the Arab Regional Payments, Clearing and Settlement Organization (ARPCSO) and supported by all Arab central banks, enables financial institutions and central banks in the Gulf and beyond to send and receive cross-border payments throughout the day at real-time in all available Arab and International currencies. It serves as a single-entry point to the region’s financial systems for global financial institutions as well as a multi-currency and multi-instrument system for local ones.
“We are already negotiating with the Arab Monetary Fund which has a remittance project called Buna which connects all Gulf Cooperation Council (GCC) countries,” Jameel Ahmed, the State Bank of Pakistan (SBP) governor, said at the launch of a new Pakistani banknote in Karachi to celebrate 75 years of the SBP.
“We are also going to sign a Memorandum of Understanding (MoU) with them soon due to which our payment system will be connected with Buna and as a result of this connectivity the speed and cost of our remittances will significantly improve.”
The SBP chief said linking Raast with Buna was one of the key objectives of the SBP’s ‘Strategic Vision 2028,’ which aims to take the Pakistani central bank further ahead.
SBP Deputy Governor Sima Kamil told Arab News that remittances by overseas Pakistanis took much longer at times, while they also didn’t get good exchange rates.
“For those people, if we link Raast with Buna, which is connected with all the Gulf countries, it will facilitate speedy transfer of remittances at good rates and lower costs,” Kamil said.
The SBP deputy governor said discussions between the two sides recently began and the Pakistani central bank was exploring pros and cons of the project.
“This has just started and we are exploring risks and benefits for us,” she said. “First there will be an MoU and then a pilot test will be run.”
The full-fledged, cross-border payment operations under the project could take at least a year, she informed.
The Gulf region is one of the major contributors to remittance inflows to cash-strapped Pakistan, with Saudi Arabia and the United Arab Emirates (UAE) providing employment to 77 percent of the Pakistani labor force in 2022, according to the Economic Survey of Pakistan 2022-23.
These Pakistani workers contribute to the South Asian economy by sending remittances, which is a major source of the country’s foreign exchange after its exports. The establishment of the link between Raast and Buna is expected to boost the flow of remittances from the region through official channels.
