Finance Minister Ishaq Dar said on Thursday that he would ask the central bank governor to coordinate with a group of philanthropists in an effort to raise dollars from overseas Pakistanis to reduce the foreign exchange shortage.
Addressing a conference on Islamic finance via video link, Dar praised the initiative of Bashir Farooqi, founder of Saylani Welfare International Trust, under which leading philanthropists expect to raise $2 billion for five years. The funds will not generate any profit for the overseas Pakistanis, Farooqi said.
The fundraising drive will help ease the shortage of foreign exchange, which is causing delays in the clearance of imported goods from port authorities.
Other participants in the initiative are The Citizens Foundation, Akhuwat Foundation and Indus Hospital.
“We will hold a joint press conference soon to ask overseas Pakistanis for help,” Farooqi said.
During his address, Dar also called for eliminating the interest-based system and said a committee had been constituted to ensure that an Islamic banking system was established.
A bank that had only 100 branches previously had grown to 1,000 branches after adopting Islamic banking practices, the finance minister claimed, according to an APP report.
He noted that the Federal Shariat Court had given the government five years to eliminate interest-based banking from the country and expressed confidence that it could “meet the criteria set for the conversion before the stipulated time” with the cooperation of stakeholders.
Dar shared that he had directed the State Bank of Pakistan and the National Bank of Pakistan to withdraw their appeals against the Federal Shariat Court ruling.
The fundraising initiative comes as the country’s foreign exchange reserves plunged to a nine-year low of $3.7bn — not enough to cover even three weeks of imports.
Banks have been refusing to open letters of credit (LCs) for a majority of imports under explicit directives from the State Bank of Pakistan as the country fights the serious shortage of dollars. Minimising dollar outflows has brought a wide section of import-dependent industrial activity to a standstill across the country. Traders have warned that thousands of containers, including those containing essential items, are stranded at the ports due to the non-opening of the LCs, which could cause shortages in the future.
The government is in talks with the International Monetary Fund (IMF) for a bailout that would release $1.2bn and unlock inflows from friendly countries.