SBP allows exporters to use funds in their special foreign currency accounts.
The State Bank of Pakistan (SBP) has announced a pivotal policy revision, allowing exporters to utilize funds in their special foreign currency accounts (ESFCAs) for overseas payments without prior approval.
As outlined in a recent circular, authorized dealers (ADs) are directed to permit exporters of goods and services to retain a designated portion of their export proceeds in ESFCAs.
Importantly, these funds can be freely deployed by exporters for a spectrum of overseas payments related to their business operations, eliminating the need for prior SBP approval.
Furthermore, the SBP mandates ADs to streamline the process by issuing debit cards against ESFCAs balances upon exporters’ specific requests.
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However, it’s noteworthy that cash withdrawals in foreign currency from ESFCAs within Pakistan are strictly prohibited under this new directive.
Expanding the scope of utilization, exporters are now empowered to deploy ESFCAs funds for a gamut of capital and financial transactions abroad, including equity investments and foreign currency loan repayments, provided they adhere to regulatory guidelines.
This strategic initiative comes amidst a concerted effort to revitalize Pakistan’s export sector, which has witnessed a resurgence in recent months. Notably, January saw a remarkable uptick in total exports, soaring to $2.792 billion, marking a substantial 24% surge compared to the previous year.
The robust performance is attributed to key sectors such as textiles, which experienced a notable uptick in exports, including value-added textile products.
Additionally, the information technology (IT) sector emerged as a significant contributor to export growth, with January witnessing a substantial increase in IT exports.
Analysts attribute the surge in IT exports to a combination of factors, including a stable local currency incentivizing IT companies to repatriate foreign earnings and deposit them locally.
Moreover, the relaxation of permissible retention limits by the SBP, elevating it from 35% to 50% in exporters’ special foreign currency accounts, has further catalyzed the growth trajectory of IT exports.
As SBP allows exporters to use funds in their special foreign currency accounts, the SBP’s latest policy initiative signals a progressive step towards fortifying Pakistan’s trade landscape, fostering a conducive environment for exporters, and propelling the nation’s economic growth trajectory.
