Senator: Pakistan central bank head says $25m cash smuggled out daily
By Katharine Houreld
ISLAMABAD (Reuters) - The head of Pakistan's central bank has told legislators he believes $25 million in cash is being smuggled out through the country's airports every day, a senator said on Wednesday.
Senator Nasreen Jalil told Reuters that the central bank governor singled out smuggling as one reason the Pakistani rupee had been falling in foreign exchange trading.
Jalil said governor Yassen Anwar told a committee of parliament's upper house that he intended to try to stop the smuggling of large sums but that controls were weak. Jalil chairs the Senate Standing Committee on Finance.
"Hundi and hawala through which money flows out of the country is totally illegal but we do not have the systems and political will to stop it," said Jalil, referring to the informal money transfer systems that circumvent anti-money laundering laws.
Anwar had been questioned by the committee after the rupee sank to a record low of 110 against the dollar last week. In the capital Islamabad, some currency traders were not offering dollars for sale last week.
Jalil said the shortage had eased and the sharp decline was linked to a loan of $59 million due to be repaid to a foreign donor. On Tuesday, the rupee regained some ground to 95 to the dollar.
One reason dollars were in such high demand was the tendency of wealthy Pakistanis to convert money into dollars and send it back into Pakistan from abroad, tax lawyer Ikramul Haq said.
Since remittances are exempt from taxes and tax authorities cannot legally question the source of remittances, this would help wealthy Pakistanis evade tax, Haq said. Continued...