Not only the overseas Pakistanis remitted home a record amount of $4,136 million during 11 months of FY06, the competing Foreign Currency Deposits (FCDs) under FE-25 scheme also rose to a record $3,481 million by the end of May 2006 as against $3,105 million at the end of May 2005, and $3,282 million at end of June, 2005.
The surge was more pronounced in last five months of the fiscal year with outstanding balances averaging about $3,498 million compared with a similar average of $3,327 million in the first six months of the year. The outstanding balances stood at their highest of $3,567 million at the end of January 2006 and lowest of $3,302 million at the end of July 2005.
Earlier on, balances under FE-25 scheme had reached $2,671 million (resident: $1,954 million, non-resident: $343 million) at the end of FY04 and $2,296 million (resident: $2,340 million, and non-resident: $331 million) at the end of FY03.
It is worth recalling that the FE-25 Scheme was introduced, vide FE Circular No 25 of June 20, 1998, in the aftermath of Pakistan''s nuclear explosions and the imposition of sanctions by most of the western countries leading to restrictions, vide FE Circular No 12 of 1998, on withdrawals in foreign currency from selected categories of foreign currency accounts existing as on May 28, 1998.
At the time of the issuance of the aforementioned FE Circular, the Government was under liability to make payments to the holders of FCDs in the amount of some $11 billion (History of SBP: 1988-2003), whereas the FE kitty of Pakistan had only left in it about $1 billion. To allay fears of any future freezing, separate ledgers were to be maintained by Authorised Dealers (ADs) for deposits under the new Scheme. Since these deposits are outside the State Bank''s forward cover scheme, these are not required to be surrendered to the State Bank. The ADs, who are free to decide the return on such deposits, are also under no restriction to lend, invest and place on deposit such funds in Pakistan or abroad subject to the observance of the prescribed regulations.
As regards their utilisation as on the end of May 2006, $1,147 million was used for financing foreign trade ie exports both under pre-and post-shipment arrangements ($851 million) and imports ($295 million) while $1,529 million was placed under various arrangements including those with SBP ($181 million under CRR and $534 million under SCRR), banks within Pakistan ($26 million) and abroad ($787 million). An amount totalling $538 million was held as balances abroad ($356 million), cash in hand ($78 million) and as ''others'' ($104 million).
Ever since the issuance of FE-12 in 1998, balances in the old FC accounts had been declining since these had to be converted into rupees or Special US Dollar Bonds by the holders at their option. Eight years after the disbanding of the old scheme viz., at the end of May 2006, the outstanding balances in these accounts stood reduced to only $104 million (resident:$76 million, non-resident:$28 million). Three years ago in May 2003, these balances stood higher at $330 million (resident:$266 million, non-resident:$64 million). (Report by [email protected]).
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