By Staff Reporter
KARACHI: The central bank on Monday raised the limit of foreign currency that information technology (IT) exporters can retain in their accounts to 50 percent from 35 percent, aiming to boost the country’s IT and IT-enabled services exports.
The State Bank of Pakistan (SBP) said the move was part of its efforts to facilitate the IT sector, which has been facing challenges due to exchange rate volatility, shortages of dollars, and a decline in imports of state-of-the-art IT equipment.
The SBP also simplified the usage of the balances available in the exporters’ specialised foreign currency accounts (ESFCAs) by allowing the IT exporters to make their payments from these accounts without any approval from the central bank or commercial banks.
“The banks have also been advised to facilitate the issuance of debit cards, enabling the IT exporters to make online payments from the balances available in their ESFCAs,” the SBP said.
The IT sector welcomed the development and said it would encourage more business opportunities and foreign exchange inflows.
Noman Said, a leading IT exporter, appreciated the facilitation from the central bank and said it would enable IT companies and freelancers to work on lucrative and long-term projects in foreign countries.
Said urged the central bank to retain this policy for a long-term basis regardless of the transition in the government in the center and increase the retention rate gradually upon the achievement of the desired results.
In addition, the SBP introduced a new framework for freelancers, who provide online services to clients abroad, to ease the opening of their bank accounts and allow higher retention of amounts in their foreign currency accounts.
The freelancers will now be able to open their bank accounts both digitally and physically at their choice with minimum documentation requirements, the SBP said. Further, their ESFCAs will be opened concurrently with the opening of their primary Pakistani rupee account.
The freelancers can retain 50 percent of their export proceeds or $5,000 per month, whichever is higher, in their ESFCAs, and can make all payments from these accounts without any approval from the SBP or banks.
Tufail Ahmed Khan, CEO and president of the Pakistan Freelancers’ Association (PAFLA) also welcomed the facilitation from the central bank and termed it much needed for a conducive working environment for a strong gig economy.
“The facility would give more empowerment to freelancers who would not only open foreign currency accounts but also generate more business from foreign clients,” Khan said.
He said the policy on foreign currency accounts should be continued on a long-term basis and commercial banks should also facilitate freelancers to open local and foreign exchange accounts easily.
According to the SBP’s annual report on Pakistan’s economy, released on Monday, information, and communication technology (ICT) services, which have the largest share in services export, came in at $2.6 billion in fiscal year 2023, nearly unchanged from the year before.
“The plateauing of ICT exports despite the addition of new firms in the market may be attributed to a decline in imports of state-of-the-art IT equipment for the production of high-end software and exporters not bringing their remittances due to exchange rate volatility,” said the report.
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