MUSHTAQ GHUMMAN

ISLAMABAD: Pakistan’s trade settlement in Chinese RMB has increased by 600 percent, ie, from 2 percent in 2028 to over 14 percent in 2023, well-informed sources in the Commerce Ministry told Business Recorder.

The State Bank of Pakistan (SBP) recently informed the Apex Committee of the Special Investment Facilitation Council (SIFC) that the necessary regulatory framework for settlement of trade in RMB is in place. The SBP has designated three banks, ie, ICBC, BoC and SCB to establish RMB settlement and the clearing setup.

People’s Bank of China (PBC) and SBP signed a cooperation Memorandum of Understanding (MoU). Subsequently, PBC authorized ICBC to act as RMB clearing bank in Pakistan. Resultantly, there has been a noticeable increase in trade settled in RMB - from 2 percent in 2018 to more than 14 percent in 2023.

According to the State Bank, the development on establishment of a regulatory framework will be communicated to importers/exporters and other interested investors and an update will be presented in the next EC.

The Council was also informed that SBP has put in place regulatory framework for facilitation of banks to carry out settlements through the Asian Clearing Union (ACU) mechanism, which allows settlement of trade in three currencies (dollar, Euro and JPY). Pakistan is an active number of ACU with total trade during Jan-Oct 2023 of $ 509 million.

The AC of the SIFC has directed Governor SBP to communicate development on establishment of a regulatory framework for ACU to concerned importers/exporters and investors and an update be presented in the next EC.

The meeting was also informed that cash over the counter facility in already is place (was never suspended) to facilitate exports to Afghanistan, subject to submission of the Customs’ declaration to ensure that foreign currency carried by Afghani importers comes from across the border of Afghanistan.

The Governor State bank of Pakistan has been directed to provide a progress update on SBP’s engagement with National Bank of Pakistan to utilize its branches/booths at border crossing points to collect foreign currency cash and present it in the next EC.