Karachi, February 23, 2024 – The State Bank of Pakistan (SBP) announced on Friday a significant move to facilitate exporters by liberalizing the utilization of foreign currency under its ease of doing business initiatives.
The central bank has amended regulations to allow exporters to freely use funds held in Exporters’ Special Foreign Currency Accounts (ESFCAs) for various international transactions without prior SBP approval.
Under the revised guidelines, exporters will now have the freedom to utilize funds held in ESFCAs for making payments abroad of current account nature, catering to the operational needs of their businesses. This includes payments for imports, addressing shortfalls or non-realization of export proceeds due to genuine reasons, payments for services or IT/digital services from abroad, dividends of domestic entities to shareholders abroad, and operational expenses for liaison/marketing/representative offices abroad.
Additionally, the amendments state that banks, upon the request of exporters, may issue debit cards against the balances held in ESFCAs. This move aims to further streamline the process and enhance the flexibility for exporters in managing their foreign currency transactions.
The key amendments include:
1. Expanded Usage of ESFCAs: Exporters can freely use funds for various international payments without prior SBP approval, including imports, services, dividends, and operational expenses of overseas offices.
2. Debit Cards Issuance: Banks can issue debit cards against ESFCAs balances to facilitate exporters, improving accessibility to funds for international transactions.
3. Capital and Financial Account Transactions: ESFCAs can be used for capital and financial account transactions such as equity investment abroad and foreign currency loan repayments, following proper procedures.
4. No Cash Withdrawals in Pakistan: Debit cards issued against ESFCAs balances will not allow cash withdrawals in foreign currency within Pakistan.
5. Transferability of Funds: Funds in ESFCAs with one Authorized Dealer can be transferred to another Authorized Dealer upon the specific request of the exporter.
6. Currency Conversion: While funds cannot be credited/transferred to other foreign currency accounts, exporters can request the conversion of ESFCA funds into PKR at any time.
This move by the SBP is expected to significantly ease the financial operations of exporters, promote a more business-friendly environment, and further boost the country’s exports by removing unnecessary bureaucratic hurdles in utilizing foreign currency reserves. The liberalization of ESFCAs demonstrates the SBP’s commitment to fostering economic growth and facilitating trade in Pakistan.
