Pakistan has been in talks with the International Monetary Fund (IMF) for several months to obtain a financial loan due to weak economy, severe financial crisis, rising inflation, and political instability. However, there has been no progress to reach the staff-level agreement with the IMF, as the government has also implemented multiple tough conditions for the loan. Pakistan is currently facing a shortage of foreign exchange reserves due to the imbalance between earnings and expenses, causing a significant decline in the value of the local currency against the dollar. The external financing has come to a complete halt due to the non-revival of the loan program agreed with the IMF in 2019. Pakistan is waiting for an intense payment of $1.2 billion under the loan program to increase the country's low foreign exchange reserves of $4.2 billion. Therefore, the President of the Exchange Companies Association of Pakistan, Malik Bostan, has offered to lend up to $24 billion to the government for two years to support the country's economy. However, there have been many questions about his offer.
Exchange companies' president Malik Bostan of the Association of Forex Companies of Pakistan, speaking to BBC, said that money is collected this way all over the world, and this project is called a swap arrangement.
Under this agreement, dollars will be bought from Pakistanis at today's rate and returned to them after two years by paying the difference in the dollar rate.
According to him, "When Pakistan conducted atomic blasts in 1998, the situation was worse than this. Pakistan was under economic sanctions. The IMF has not denied Pakistan this time, but it had refused to lend money at the time. In those circumstances, then Prime Minister Nawaz Sharif had invited me as the president of the Exchange Company Association of Pakistan."
Malik Bostan said, "When they sought help from us, we mobilized Pakistanis around the world, and under the swap arrangement, we brought $10 billion to the government in two years. At that time, the dollar rate also decreased. We still want to do the same thing."
Explaining how this project will work and how the money will be returned, he said, "We offer two options to ourselves and overseas Pakistanis who have dollars in their banks, either they sell us these dollars, or they give us credit for two years. After two years, we return it to them, paying the difference in the dollar rate. And these transactions are interest-free."
"As for this, we will set up a board of trustees for transparency and accountability, and this project will benefit Pakistan, not any individual or company," he added.
If it's so easy, then every exchange company is an IMF:
Economic experts and the General Secretary of the Association of Exchange Companies, Zafar Paracha, believe that the proposed project for the country's boost in horticulture is not as easy as it seems. Paracha said, "It's not that simple. Everyone has their own ideas. I don't completely reject their proposal, but it's not that easy." He further added, "The whole government is struggling with ups and downs for 1.2 billion. If it were that easy, every exchange company would have its own IMF. I think it's impossible."
Paracha participated in a session of the Senate Standing Committee on Finance, where he commented on the proposal submitted by the country's horticulture sector, saying, "With some suggestions, we can increase the exchange rate and gold exports. Currently, six billion dollars in gold exports are being made through exchange companies every year. This money is taken from the public and given back to the public." He added, "Now some suggestions can be implemented to increase foreign exchange in the country. We can generate from six to twelve billion, but the government will have to bear the difference if we swap, that is, take dollars at the rate of 285 today and return it at the rate after two years. Where will the government get the difference from?"
Paracha disagreed with the horticulture proposals, saying, "It's neither in the country's nor the people's interest. If we give overseas Pakistanis the status of export industries, we can increase the foreign exchange. It can stop smuggling.
According to them, in the current situation, we cannot afford to leave the IMF and look towards any other option. If we consider any other alternative, whether it is crossing the sea or any other feasible way, we can explore it together.
A leader of the Muslim League said that during the tenure of former Prime Minister Imran Khan, there was a strong lobby of educated and wealthy overseas Pakistanis who supported him. They also introduced schemes for overseas Pakistanis during their tenure, but despite these relationships, they could not succeed.
Mohammad Zubair said, "Whether you are a Pakistani living abroad or a capitalist, you see what the political and economic situation of your country is. At the moment, the State Bank of Pakistan has almost stopped foreign companies from sending their profits due to pressure on the dollar. On the other hand, in such a situation, it is said to overseas Pakistanis to send money.
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