Overseas remittances ‘WHT on bank transactions may encourage hundi system’

Pakistan Businessmen and Intellectuals Forum’s (PBIF) president Mian Zahid Hussain has apprehended that many overseas Pakistanis might prefer using hundi system over legal banking channels in the wake of withholding tax (WHT) imposed on bank transactions.

In a statement issued on Monday, the PBIF chief said that though the government had imposed the WHT on banking transactions due to falling exports and increasing trade gap, it has not been accepted by traders. He demanded of the government and State Bank of Pakistan to bring an end to the trend of dollarization and increasing volume of black economy which is said to be around 65 per cent of the GDP and thus against the national interests. Besides, traders across the country have acquired lockers and started business in the US dollar, instead of unit, and as such it was not a good sign for the economy, he opined. 

The SBP has taken various steps to strengthen rupee and had even allowed exchange companies to import dollars, still the rupee has not gained strength in the local currency, he said, adding that traders used to sell dollar at a profit ranging between 20 to 50 paisa, but the premium could jump to Rs 1.50 to Rs 2, discouraging all those sending over $18 billion per annum to Pakistan. He said that with the erosion of rupee’s value during the tenure of former government, people had started converting their savings into dollar and as result of which commercial banks had more dollars than the central bank.

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