Will Dar’s formula of collecting dollars from charities save economy?
Sylani Welfare founder Bashir Farooqui's proposal to borrow $2 billion from overseas Pakistanis in association with Akhuwat, TCF, and Indus Hospital.
After exhausting all traditional means of replenishing foreign exchange reserves, government came up with the Dar formula of collecting dollars from charity.
However, unlike the recent government-sponsored dam fund campaign, the government has decided to hand over the leadership of this campaign to get free dollars from abroad to social personalities with strong reputation and proven services.
Addressing a conference on Islamic finance through video link on Thursday, Finance Minister Ishaq Dar asked the central bank governor to help philanthropists in their efforts to raise dollars from overseas Pakistanis to overcome the shortage of foreign exchange. Connect with a group.
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The finance minister’s proposal comes after Bashir Farooqui, founder and chairman of Ceylon Welfare International Trust, made an enthusiastic announcement that he would hold a press conference with other prominent philanthropists to ask for dollars from overseas Pakistanis.
Farooqui said the leadership of Akhot Foundation, The Citizens Foundation and Indus Hospital would support him in his efforts to raise funds to end the country’s liquidity crisis. He said that he will try to earn 2 billion dollars for five years.
No profit will be given to the depositors, i.e. under this scheme, the dollars will be deposited in the Zakumi treasury for a fixed period without any cost in the form of profit.
The borrowed dollars will help create employment opportunities for millions of unemployed as businesses will be able to open letters of credit (LCs) for imported raw materials.
However, an economist associated with a research house said on condition of anonymity Dawn Talking about this campaign is the last effort to close the external financing gap and pave the way for signing the Letter of Intent with the International Monetary Fund.
The government and the IMF are engaged in negotiations to get the $7 billion loan program back on track. The long delay in revitalizing the IMF program has reduced the central bank’s foreign exchange reserves to $3.1 billion, which is insufficient to cover even one month’s national import bill.
The analyst said it would be difficult to borrow heavily on a non-commercial basis as regular foreign exchange channels, remittances and dollar-denominated New Pakistan Certificates are already losing their appeal to overseas Pakistanis.
Remittances fell 19 percent year-on-year to $2 billion in December. Similarly, foreign investment in Naya Pakistan Certificates during the first six months of the current financial year stood at $190 million against the annual target of $1.63 billion.
In the current financial year, the overall payment of foreign loans was 21 billion dollars. After paying off or rolling over some of that debt, Islamabad will have to pay off more than $8 billion between February and June, with up to $3 billion likely to be rolled over.
