ISLAMABAD, March 10: Senate Standing Committee on Finance and Revenue has asked the State Bank of Pakistan (SBP) to submit comprehensive report within seven days on foreign exchange investment abroad including rate of interest and its origin.

The direction came in the wake of reports that the government had invested the reserves at a lower rate and non-transparent criteria, while it had borrowed at higher rates resulting in huge loss to the national kitty.

Chairman standing committee Senator Ahmad Ali told Dawn on Saturday that the committee had sent a letter to the SBP seeking details of the foreign exchange investment in foreign countries — interest rate and areas of investment.

He was talking to Dawn following the reviewing of Central Board of Revenue (CBR)’s performance in implementation of the reforms of tax administration and revenue collection.

"We want to make public the information regarding the forex reserves investment abroad. The central bank is supposed to give us the details of the investment," the chairman said in reply to a question.

An official source said that the government had kept its $3.2 billion foreign exchange reserves with foreign banks at around two per cent interest rate, while it was borrowing foreign exchange through $800 million bonds at more than seven per cent interest rate, losing $120 million per annum.

Another member of the committee on condition of anonymity told Dawn that the public was not aware about the criteria of investment made by the SBP. Even the State Bank did not provide the details about the investment made with/through the Hong Kong and Shanghai Bank.

It was not clear whether investment had been made in the US government bonds or euro-denominated bonds or non-government bonds and what was the rating of the instruments in which investment had been made.

The consideration for investment was obviously to earn best possible return. But in the case of poor country like Pakistan, primary consideration will be "safety and security" of the amount invested and the profit motive becomes secondary in nature, the member asserted.