December 4, 2002	Wednesday	Ramazan 28,1423

KARACHI, Dec 3: The non-governmental organisations and the UN and other donor agencies operating in Afghanistan can now fund their activities with ease.

The reason: The State Bank has allowed them to physically take out of Pakistan over $10,000 in foreign currency and Rs3,000 in local currency. They can also take unlimited amount of rupees to Kabul out of their foreign currency accounts in Pakistan if the money in these accounts has come from abroad. (That is, if it has not been generated locally).

The Exchange Policy Department of SBP issued a circular to all banks on Tuesday notifying this decision. The circular laid down the procedure for carrying cash to the war-ravaged country after bringing it to the notice of the customs authorities.

The circular (F.E. No 17) says that NGOs and the UN and other donor agencies operating in Afghanistan may take out the rupee amount by encashing their foreign currency accounts at the inter -bank rates.

It says that the banks would issue encashment certificate to them stating that the foreign currency has been encashed “for the purpose of Afghanistan”.

Those taking the money out of Pakistan would submit one copy of this certificate to the customs authorities and keep the other one with them after getting it stamped by the customs officials. The stamp would say “amount allowed to be taken out”. The Banks would keep the record of such transactions for SBP inspection.

Senior bankers say the central bank has taken this decision to stop currency smuggling from Pakistan into Afghanistan. They say that the agencies operating in Afghanistan often need to pay in rupees and dollars that are still preferred over afghani despite its re-denomination. They say since transfer of money to and from Afghanistan through banking system is not possible at the moment there is need to enable the NGOs and other agencies working there to have an access to money denominated in acceptable currencies in Kabul.

On October 7 this year, the Karzai government introduced new Afghani worth 1,000 old afghanis to stabilize the local currency but reports say the move has not paid off: People still prefer using the rupee and the US dollar in Afghanistan parts of which are not showing signs of returning to normalcy.

Bankers say currency smuggling from Pakistan into Afghanistan had increased immediately after the US-led forces launched air attacks on Afghanistan on October 7, 2001, in retaliation of the razing of twin towers in New York by terrorists on September 11.

They say that initially money changers used to sell rupees or US dollars to those who smuggled these currencies into Kabul but later on withdrawals started from bank accounts also for taking money from Pakistan into Afghanistan. Senior bankers say this increased cash holding level here is sending disturbing signals in the banking community in Pakistan.

They say the SBP move to allow NGOs and the UN and other donor agencies to take out money from Pakistan into Afghanistan is a move that addresses this issue.