Foreign Currency accounts in Pakistan have a bad history. Some may not have long memories and some of the members may be too young to remember but the people who suffered do.
Let me remind you about what happened to the foreign currency deposits in 1998.
In the aftermath of the Atomic Tests by Pakistan on May 31, 1998, at Chaghai, (in response to the Indian 2nd atomic Test) the US imposed sanctions on Pakistan and the IMF suspended disbursements to Pakistan. Fourteen other countries including Japan followed the US and suspended aid to Pakistan. The direct effect of this was that Pak Rupee declined from 46 to a US dollar to 63 by mid-July 1998.
This prompted the then PML-N gov’t to freeze Foreign Currency accounts. Later these were reopened but one could only withdraw in Pak Rupees at the rate prior to devaluation. In other words, the foreign currency account holders lost nearly 30% value through no fault of theirs.
The income earned by the overseas Pakistanis (except for a very select few) is literally from the sweat of their brow. Should the economic conditions fail to improve considerably, what guarantee is there that something similar will not be repeated?
The proposed scheme is no doubt very good because the interest rate offered is at least 50% better than what you get in the UK/US. However, even though for the sake of Pakistan I hope it succeeds, I do not think that overseas Pakistanis have sufficient trust in the stability of Pakistan’s currency to pour in billions of dollars.
OVERSEAS replied on Sunday, February 3, 2019 10:22 AM
Huge amount was withdrawn by policians, prior to above action, which they kept ready for selling in the open market. I was paid at 46 Rs/$ against my lifelong saving in bank. Finally I had to buy $ at high rate from these corrupts. |
thinker replied on Sunday, February 3, 2019 11:13 AM
Couple of observations regarding this issue
1. In the US and UK if you earn interest even on foreign deposit or bonds you are required to pay income tax on it. The tax rate is around 30%, so effectively after paying tax they will be getting 4% return on these bonds and not 6.25%. If they invest in US treasury bonds which is considered the most secure investment in the world they get around 3.5%. So one can estimate how many Pakistani's would prefer this bond over US treasury bonds.
2. Even right now we are using up 1.5 billion dollars a month due to current account deficit, hence the default has only been delayed by a few months due to SA and UAE deposits but not averted. If the GOvernment does not change its policies we will run out of dollars in 6 months or so. (current reserves are 8 billion).
3. In the Dam fund overseas Pakistani's contributed a total of 7 million dollars, so we can guess that investment in these bonds wont be much either |
PBCs replied on Sunday, February 3, 2019 12:32 PM
In case of investor's death, is there any exit process defined for redemption of these PBCs by the legal Inheritors? |
Ahmad replied on Sunday, February 3, 2019 01:08 PM
@thinker: in US, Europe etc., you can hold certain amount of savings without paying extra tax. In West Europe, the amount limit is 30k euro per person. If a person invests more than 30k euro in Pakistan banao scheme, provided he has no other savings, he will not need to pay extra tax. Further, Pakistan currency is weak but after 3 or 5 years you can receive cash in Pakistan rupee which will yield more. Pakistan is facing several issues but our future is associated with this country. We should go ahead and invest in our homeland. |
Khan Pakistani replied on Sunday, February 3, 2019 05:52 PM
Everybody are concerned about their returns! What about Pakistan and supporting your mother land?? Even if returns are breakeven! I sold too much land in Pakistan recently and kept all cash in Pakistan instead of moving them to North America legally and due to USD drop, I lost 30% of value. Still no sweat as long as funds are in my Pakistan. |
Abid from brussels replied on Sunday, February 3, 2019 10:25 PM
Zinda baad brother Ahmad and khan Pakistani.
Pakistan will rise as long as like you patriotes are InshaAllah.
No land I found better than Pakistan with reference of taxes. Europe is surviving just on taxes. |
