Charities’ plan to help raise $2bn from overseas Pakistanis put in ‘cold storage’ by ministry

In February, Finance Minister Ishaq Dar publicly gave his green signal to a reported plan by charitable organisations to help raise about $2 billion from overseas Pakistanis.

The proposed fund-raising was planned to be “interest-free” for a five-year period, and announced at the National Islamic Economic Forum’s (NIEF) ‘Defining a roadmap for Islamization of Pakistan’s economy’ event in Karachi.

More than two months later, there is little to no progress on the endeavour even as Islamabad scrambles to arrange financing support to meet a key condition of the International Monetary Fund (IMF) that would revive its stalled bailout programme.

“We (welfare organisations) have requested overseas Pakistanis to sacrifice for the country, and save dollars with the State Bank for five years. We are hopeful that an inflow of $2 billion can come this way,”

Bashir Farooqi, chairman of the Saylani Welfare International Trust, told Business Recorder during an interview last week.

He said the group of charities offered the proposal to the government, and held meetings, but progress has remained elusive.

“We have met Finance Minister Ishaq Dar twice, once through a video meet and once in person at the Prime Minister House.

We also met the State Bank Governor twice. Chairman Akhuwat Foundation Amjad Saqib even met the prime minister.

“However, so far, no one from the government has stepped forward to support this initiative, which will help the country come out of this Letter of Credit (LC) crisis the industry is facing.”

Pakistan, the fifth most populous country in the world, is currently battling one of its worst economic crisis amid record-breaking inflation and precariously low foreign exchange reserves.

Islamabad is engaged in talks with the IMF to unlock a $1.1 billion tranche that would alleviate some short-term woes, but progress has been stalled over a condition of external financing support that has only trickled Pakistan’s way.

Meanwhile, the currency has depreciated to historic levels before minor gains last week. With reserves at less than one month of import cover, the central bank moved to impose restrictions in its bid to control the current account deficit.

“Everyone would agree that Pakistan has never faced such problems before,” said Farooqi. “This historic peril has come because industries have been disallowed to even import raw material. There was a time when the extravagance was so high that people used to import flowers worth Rs2 million for just a two-hour wedding event.

“Now the situation is such that even financially-sound companies are shutting down operations. One can only assume how people who have lost jobs would be running their domestic affairs.”

When asked why the government was showing reluctance in the proposal, Farooqi said fear could be at play.

“I think the government is afraid that if we alleviate the country’s problems, then people will lose interest in voting for them.”

The finance ministry did not immediately respond to a request for comment.

Pakistan’s woes in its balance of payments’ position are just the tip of the iceberg.

Years of under-investment in human capital and public infrastructure have pushed away foreign investors to better alternatives, while domestic political turmoil has also scared away any new inflow. Pakistan’s economic growth, which has been projected to grow only at 0.5% this fiscal year, will result in massive unemployment.

“Today, a majority of Pakistanis are looking for help from others. They cannot meet their expenses on their own. Millions of people have withdrawn their children from schools because they can’t pay school fees.”

However, ‘donor fatigue’ has also started to kick in inside the country.

“For instance last year, a person sponsored 15,000 meals in Ramadan. However, the same person sponsored only 2,000 this year – less than a quarter.

“The government, politicians, bureaucrats etc think only of themselves but not the country. And because of this, the nation of 230 million is struggling,” he said.

Copyright Business Recorder, 2023