Pakistan integrates with Arab payments platform in significant step forward
Pakistan is making strides in its digital economy, with the State Bank of Pakistan (SBP) taking significant steps to promote a cashless society. Hina Rabbani Khar, a senior official, has expressed concern about the impact of slower internet services on the digital and cashless economy.
In an effort to boost digital payments, the SBP has issued five licenses and integrated Pakistan's digital payment system with the Arab world's Buna platform, operated by the Arab Monetary Fund (AMF). This integration will allow cross-border transactions, but only inflows from overseas Pakistanis are permitted, with no provision for outward transfers.
The SBP aims to provide 75% of Pakistan's youth with digital financial services by 2028. To encourage the adoption of digital payments, the government will absorb the costs. Digital transactions in Pakistan cross the Rs1 trillion mark every nine days, and salaries, pensions, taxes, and utility bills will gradually be shifted to the cashless system.
However, not all companies are participating equally in Corporate Social Responsibility (CSR) activities. In 2024, 315 out of 447 companies carried out CSR activities, spending Rs 22 billion. Yet, 199 firms did not share details of their CSR activities, and 100 did not spend anything. A penalty of Rs 1 billion has been placed for non-disclosure of CSR activities.
The FBR Chairman stated that CSR is thriving due to tax credits, with charity spending remaining exempt from taxation. The government is also preparing to repay $500 million on the maturity of a Eurobond by September 30, 2025. Senior official sources suggest that either foreign inflows are expected or the central bank will continue purchasing dollars from the market to ensure timely repayments.
On a different note, the National Electric Vehicle Policy 2025-30 has been criticized, and officials from the Ministry of Industries and Production have been summoned for a detailed briefing.
In conclusion, Pakistan is moving forward in its digital transformation, but challenges remain, particularly in the areas of corporate responsibility and policy implementation. The government and financial institutions continue to work towards a cashless society, with the aim of providing digital financial services to the majority of the youth by 2028.
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