ISLAMABAD: The registered flight of capital from the country during the last five years (2009-14) is $478.56 billion with the approval of State Bank of Pakistan and Economic Coordination Committee of the Cabinet.
Official document available with Daily Times revealed that during the year 2009-10, the SBP approved $21.39 billion while in 2010-11 the total outflow recorded $35.44 billion ($15 billion and $20.44 billion approval). During the year 2011-12, the total capital outflow remained $44.66 billion (SBP $24.50 and ECC $20.16 billion). The maximum capital outflow recorded during 2012-13, which stand for $298.23 billion (SBP $271.39 billion and ECC $26.84 billion approval). This was last year of PPP led coalition government where maximum capital outflow recorded in the country. In the last fiscal year 2013-14 the capital outflow has recorded $78.84 billion (SBP $40 billion and ECC $38.84 billion approval).
The document revealed that the SBP accords approvals and maintains data for permissible transactions for investment abroad through the formal channels. The Bank has been empowered to approve such investment proposals of Pakistanis involving an amount up to US$ 5 million. The investment proposals exceeding the above amount are approved by the Economic Coordination Committee (ECC).
It should be noted here that the SBP does not have record of any illegal flight of capital from the country. However, the government agencies/departments (such as; Customs, FIA and FBR) having the requisite legal jurisdiction and physical presence at exit points to control unauthorized movement of funds outside Pakistan.
The flight of capital generally occurs when assets and/or money rapidly flows out of the country due to factors such as an adverse economic event, poor investment climate, worsening law and order situation, political upheaval etc. The flight of capital may also include outflow of funds from the country through illegal channels, which are undocumented, and as such these transactions are unquantifiable. The opinions on illegal outflows are generally speculative in nature and the data reported in the press varies.
The SBP has enhanced its coordination with the concerned law enforcement agencies to check outflow of currency through illegal channels. On active persuasion by SBP, FBR has established currency detection units at major airports of the country. Moreover, increased coordination between the SBP and FIA is expected in a drive against illegal foreign exchange operators. These administrative steps with the support of law enforcement agencies are likely to check the outflow of capital through illegal channels.
Apart from pursuing Swiss case, FBR is actively pursuing other initiatives which will help track funds that may have been drained off from Pakistan and invested in offshore jurisdictions. The FBR like the rest of the world is pursuing bilateral as well as multilateral framework, the document further revealed.
Pakistan joined the Global Forum on Transparency and Exchange of Information in Tax Matters (Global Forum) in 2013 as its 111th member, Global Forum allow with ease generation, access and exchange of all critical tax information across the globe.
Federal Cabinet has approved FBR’s proposal to Pakistan becoming signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MC), which allows a signatory to receive all types of assistance and tax information, for example on request, in-routine, automatic, and /or spontaneous, from all MC signatories.
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