Exporters in Pakistan allowed to use foreign currency accounts

WEB DESK: In a significant move to boost trade and streamline business operations, the State Bank of Pakistan (SBP) has granted exporters the freedom to utilise funds in their special foreign currency accounts for international payments without the need for prior approval.

This decision aims to facilitate trade and promote a more business-friendly environment.

The SBP directive outlines that authorised dealers (ADs) are now permitted to let exporters of goods and services retain a specified percentage of their export proceeds in exporters’ special foreign currency accounts (ESFCAs).

Exporters can then freely utilise these funds to make various types of payments abroad, addressing the operational requirements of their businesses, all without the necessity of prior approval from the SBP.

This initiative, undertaken by the central bank, is geared towards providing a more conducive environment for exporters, fostering ease of doing business, and further liberalizing the utilization of retained funds.

To enhance this facilitation, authorised dealers are mandated to issue debit cards to exporters upon specific requests, allowing them to access balances held in ESFCAs.

It is important to note that cash withdrawals in foreign currency from ESFCAs within Pakistan are strictly prohibited.

As outlined in SBP guidelines, exporters have the flexibility to use these funds for the purpose of paying for imports related to their business operations, provided they adhere to relevant laws, regulations, and the applicable import policy order.

Moreover, funds in ESFCAs can be utilised for a broader spectrum of transactions, including payments related to capital and financial accounts such as equity investments abroad and the repayment of foreign currency loans.

However, it is imperative to follow the prescribed procedure as outlined in the relevant regulations for the remittance of such transactions.

This regulatory shift comes at a time when the export sector has been displaying signs of recovery in recent months, overcoming challenges posed by high energy costs and a scarcity of dollars for importing raw materials.

The SBP’s progressive measures aim to further fortify the resilience of the export industry and contribute to sustained economic growth.

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