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Arab News
11-07-2025
- Business
- Arab News
Pakistan to complete pilot project for digital currency rollout by June next year
KARACHI: Pakistan's central bank plans to complete a pilot project for a digital currency in the ongoing fiscal year, its spokesperson said on Friday, as the country takes cautious steps toward embracing blockchain-based payments while tightening oversight of its virtual asset economy. The pilot announcement follows the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA) through a presidential ordinance earlier this week. The law empowers the authority to regulate the country's growing crypto market, crack down on money laundering and terror financing, and promote responsible innovation — a move analysts say could bring an estimated $25 billion in virtual assets into the tax net. 'We hope to complete the pilot within the current fiscal year [ending June 30, 2026],' Noor Ahmed of the State Bank of Pakistan (SBP) told Arab News when asked about the rollout timeline. 'Tech partner and other details will be announced in due course.' Shankar Talreja, head of research at Topline Securities, said it was too early to say who would use the digital currency, since a pilot was still being launched, though he said it could benefit most bank account holders. 'Since this would be backed up [by the] central bank, so existing digital payment users can use this for payments,' he said. 'The challenge would be if merchants accept this initially.' The South Asian nation had long remained under scrutiny for weak financial controls and was only removed from the Financial Action Task Force's (FATF) 'grey list' in 2022. The creation of PVARA is seen as part of Islamabad's broader effort to cautiously formalize the virtual asset space. 'The legality of digital assets has been a grey area in Pakistan in the recent past from a practical standpoint,' said Nayab Babar, the chief investment officer at the Prime Minister's Pakistan Startup Fund. 'Creation of the crypto council is an extremely important development which gives confidence to consumers and corporates alike, that there is a way forward to legally participate in this booming asset class without fear of losing money,' he added. Farrukh H. Khan, the chief financial officer at Jazz, Pakistan's largest digital operator and a unit of global telecom giant VEON, also welcomed the new regulatory measures. 'It is the right approach that we pilot it and cautiously move forward,' he said while pointing out the government's decision would help document Pakistan's 'very large' base of crypto investors. 'According to Binance, which is one of the largest [digital] trading platforms, about 15 million Pakistanis are registered on their platform,' he said. To integrate digital assets into the economy, the government earlier launched the Pakistan Crypto Council (PCC) in March and later appointed Binance founder Changpeng Zhao as a strategic adviser. The move has been welcomed by retail traders like Muhammad Huzaifa, who said the lack of legal cover had previously left crypto investors vulnerable. 'Sometimes few government institutions like the FIA [Federal Investigation Agency] freeze the bank accounts of traders,' said the 33-year-old. 'These laws will lend more freedom and space for traders as they can buy, sell and invest in crypto easily without any fear,' he added. Asked about his digital holdings, he said he was managing multiple accounts 'between $50,000 to $100,000.' Farhan Hassan, the chief digital officer at Easypaisa Digital Bank (eDB) with over 50 million users, praised the creation of PVARA as a key step toward safer adoption. 'Pakistan has long been poised for broader crypto and blockchain adoption, but it lacked the regulatory clarity to unlock its full potential,' he said. 'This landmark development sets the foundation for a secure, transparent and regulated framework to guide the growth of virtual assets in Pakistan.' Hassan added that eDB was 'uniquely positioned' to collaborate with regulators in piloting, testing, and scaling financial solutions aligned with both global standards and local needs. CHALLENGES Still, analysts caution that implementation could be challenging due to the government's institutional capacity. 'The regulators may lack technical capacity and real-time monitoring tools to fully oversee crypto markets,' said Muhammad Waqas Ghani, head of research at Karachi-based JS Global Capital. He maintained that Pakistan's stock market was a more regulated and secure investment option, offering greater protection against fraud and manipulation compared to the still-evolving crypto space. Pakistan may also require the International Monetary Fund's approval if it plans to subsidize electricity for future crypto mining and AI data centers. '[The IMF] staff reiterated the importance of maintaining a level playing field for all private sector participants and will continue to engage with the authorities on this as appropriate as plans develop further,' Mahir Binici, the IMF's resident representative in Pakistan, said this week. Talal Ahmad, an official from the office of State Minister on Blockchain and Crypto Bilal Bin Saqib, did not provide any details in response to Arab News queries. 'A lot of these questions don't have answers at the moment. Could you wait until we pass the regulation law [from parliament]?' he said. Asked who would be the first users of Pakistan's digital currency, SBP's Ahmed said the central bank would share such details at a later stage. Pakistan's push follows the example of countries like India, which launched a pilot e-rupee in 2022. The Reserve Bank of India initially allowed selected banks to use it for settling secondary-market transactions in government securities before extending it to the retail sector.
Arab News
09-07-2025
- Business
- Arab News
Pakistan enacts landmark law to regulate virtual assets, plans pilot for digital currency
KARACHI: Pakistan has formally enacted its first law to regulate virtual assets, establishing a federal authority to license and oversee crypto-related businesses, the finance ministry said on Wednesday, as the country joins a growing list of nations adopting formal oversight of blockchain-based finance. The Virtual Assets Act, 2025 creates the Pakistan Virtual Asset Regulatory Authority (PVARA), a new autonomous regulator to supervise the virtual asset economy, ensure compliance with global anti-money laundering standards and support financial innovation through regulatory sandboxes. Pakistan's move aligns with similar frameworks adopted by global peers such as the United Arab Emirates, Singapore, India, and the European Union, where regulators have introduced crypto-specific licensing, centralized oversight authorities, and pilot programs for central bank digital currencies (CBDCs). The State Bank of Pakistan has also separately announced it is preparing to launch a pilot for a digital rupee, marking a broader shift toward digital modernization of Pakistan's financial system. 'The Authority has been granted comprehensive powers to ensure transparency, compliance, financial integrity, and the prevention of illicit activities, in alignment with international standards including those of the Financial Action Task Force (FATF),' the finance ministry said, describing the powers of the new regulator set up under the Virtual Assets Act. Separately, speaking at the Reuters NEXT Asia summit in Singapore on Wednesday, Governor State Bank Jameel Ahmad said the new law would 'lay down the foundations for the licensing and regulation' of the virtual assets sector and that the central bank was already in touch with some tech partners. He said a legal framework for virtual assets was necessary to 'evaluate and manage the risk very carefully, and at the same time not allow to let go the opportunity.' In May, the State Bank clarified that virtual assets were not illegal but advised financial institutions not to engage with them until a formal licensing framework was in place. NEW POWERS The new regulator will introduce a structured licensing regime for all firms offering services related to cryptocurrencies, digital tokens and blockchain-based assets in or from Pakistan. These entities must meet operational and compliance standards and will be subject to ongoing reporting obligations. The law gives PVARA powers to combat illicit finance and enforce transparency in line with the FATF framework, a key benchmark for Pakistan, which was removed from the FATF grey list in 2022 after significant reforms. The regulator's governing board will include top officials from Pakistan's economic and regulatory institutions: the governor of the State Bank of Pakistan, secretaries of finance, law, IT and telecom, as well as the chairpersons of the Securities and Exchange Commission of Pakistan, the Federal Board of Revenue and the Digital Pakistan Authority. Two independent directors with expertise in law, technology, or finance will also be appointed by the federal government. The chairperson of the Authority, who will lead PVARA's operations, is to be selected based on 'demonstrated experience in finance, law, technology, or regulatory affairs,' according to the statement. In a nod to Pakistan's Islamic financial system, the law mandates the creation of a Shariah Advisory Committee to advise PVARA on the religious permissibility of virtual asset products and services. Any licensed firm offering Shariah-compliant services must adhere to this committee's rulings. To handle disputes, the law also establishes a Virtual Assets Appellate Tribunal, which will operate independently and include experts in law, finance, and technology to hear appeals against regulatory decisions. The legislation provides space for responsible innovation by allowing startups and developers to test blockchain-based products within a regulatory sandbox, a controlled environment supervised by PVARA. The authority may also issue no-action letters, temporarily exempting experimental projects from certain rules under defined conditions. DIGITAL RUPEE The enactment of the new law builds on recent crypto-focused developments in Pakistan. In March 2025, the government-backed Pakistan Crypto Council (PCC) was launched to support blockchain and virtual asset adoption. It has already initiated conversations with global crypto firms and plans to explore bitcoin mining using surplus energy. It has also appointed Binance founder Changpeng Zhao as a strategic adviser and plans to establish a state-run bitcoin reserve. It has also held talks with US-based crypto firms, including the Trump-linked World Liberty Financial. Meanwhile, the State Bank of Pakistan is preparing a pilot project for a digital rupee, Governor Ahmad said while speaking at the Reuters NEXT Asia summit. Pakistan was 'building up our capacity on the central bank digital currency' and hoped to roll out a pilot soon, Ahmad said. With inputs from Reuters
Arab News
09-07-2025
- Business
- Arab News
Gulf remittances drive record $38.3 billion inflow to Pakistan in FY25, surpassing IMF loan package
KARACHI: Pakistan received a record $38.3 billion in workers' remittances during the last fiscal year, reporting an increase of about $8 billion over a 12-month period that exceeds the country's ongoing International Monetary Fund (IMF) loan program, according to official data and analysts on Tuesday. The remittance surge from $30.25 billion in FY24 helped shore up the country's foreign reserves, prompting experts to says it is likely to push the current account into surplus for the first time in over a decade. The IMF Executive Board approved a $7 billion Extended Fund Facility (EFF) for Pakistan in April 2024, spanning 37 months, after acknowledging Islamabad's structural reforms and stabilizing macroeconomic indicators. The government described the bailout as critical to reviving an economy that had faced a prolonged financial crisis and balance-of-payments stress over the past two years. 'Remittances have actually rescued Pakistan beyond expectations. It was a significant jump of over $8 billion in annual remittances, which is more than the whole IMF program funding,' Shankar Talreja, head of research at Topline Securities Limited, told Arab News after the central bank released remittance figures for the last fiscal year. 'Thanks to the remittances, we will be able to record a current account surplus for the first time after 13 years of deficit and for only the second time in the last two decades,' he added. According to the State Bank of Pakistan, Saudi Arabia led all contributors during FY25, with remittances totaling $9.34 billion, followed by the United Arab Emirates at $7.83 billion, the United Kingdom at $5.99 billion and the United States at $3.72 billion. Remittances from Gulf Cooperation Council (GCC) countries excluding Saudi Arabia and the UAE totaled $3.71 billion, while EU countries contributed $3.53 billion. Commenting on the data, Mohammed Sohail, CEO of Topline Securities, wrote on social media: 'Record Remittances When Most Needed. In a year marked by economic challenges, overseas workers stepped up: Pakistan received a record USD 38.3 billion in remittances in FY25 — up 27 percent.' The fiscal year average stood at approximately $3.19 billion per month, well above the average of $2.52 billion in FY24.
Arab News
22-06-2025
- Business
- Arab News
Cherry festival in northern Pakistan draws crowds amid growing exports to China
SKARDU, Gilgit-Baltistan: As Pakistan begins to export cherries to neighboring China, a colorful one-day festival in Skardu this week drew hundreds of visitors, highlighting the potential of agri-tourism and cherry farming in the northern Gilgit-Baltistan (GB) region, officials and growers said. Home to the Khunjerab Pass — the highest paved international border crossing in the world — GB is often described as Pakistan's gateway to China. The region's cold climate is ideal for growing high-quality fruits such as cherries, apricots and apples. 'This is the 5th National Cherry Festival, and we are organizing Agri-Mela as part of the festival,' Zakir Hussain, deputy director at the GB agriculture department, told Arab News on Friday. 'The aim of this festival is to introduce cherry as a cash crop.' He said the event, organized in collaboration with the State Bank of Pakistan, aimed to raise awareness about harvesting, marketing and the economic importance of cherries. According to the GB agriculture department, the region produces 8,000 to 9,000 tons of cherries annually, with dried cherry marketing now also underway. 'Almost 3,000 tons of cherries had been exported to China in 2024,' Hussain said, adding that GB was the leading cherry-producing region in Pakistan. Local farmers say the festival boosts their income and visibility. 'We have been growing cherries for the last 12 to 13 years and we have 200 to 300 cherry trees in our orchard,' said Skinder Ali, a 40-year-old farmer. 'Whenever the festival is held in Gilgit-Baltistan, we participate. And due to this event, we get access to the market at the national level.' The festival also attracted tourists from other parts of the country. 'We especially came to Skardu to see the cherries, and we are from Islamabad,' Zohra Begum, a 52-year-old visitor, said. 'We have been visiting [the stalls] for the last hour... The taste of cherries is very good ... So far we have purchased 10 kilograms. Let's see how much we purchase later.' 'I am a traveler and biker from Lahore,' said Mohsin Abbas, another tourist. 'We were in Shigar last night when we came to know about the festival. So we came here... We have tasted the cherries and they are very delicious.' Ghulamullah Saqib, an agriculture expert and trainer, said the region's climate is well suited for cherries, which require 800 to 1,000 chilling hours to bear fruit. 'There are 14 varieties of cherry that are found in Gilgit-Baltistan,' he added.
Arab News
16-06-2025
- Business
- Arab News
Pakistan holds interest rate at 11% as Mideast conflict poses new economic challenges
KARACHI: Pakistan's central bank kept its key interest rate unchanged at 11% on Monday, maintaining a cautious stance, as financial analysts warn heightened Middle East tensions and volatile global oil prices add new risks to the country's fragile external sector and inflation rate. A Reuters poll released earlier on Monday had shown analysts revising their expectations for a rate cut in light of Israel's military strikes on Iran that began on Friday and have since intensified, pushing up global commodity prices. 'The [Monetary Policy] Committee noted some potential risks to the external sector amidst the sustained widening in the trade deficit and weak financial inflows. Moreover, some of the proposed FY26 budgetary measures may further widen the trade deficit by increasing imports,' the central bank said, announcing its decision to leave the rate unchanged. 'In this regard, the Committee deemed today's decision appropriate to sustain the macroeconomic and price stability.' Monday's decision comes days after Pakistan announced its Rs16.7 trillion ($62 billion) annual budget targeting 4.2% growth, up from a provisional estimate of 2.7% for the current year. The MPC noted that despite the widening trade deficit, the current account remained broadly balanced in April, and foreign exchange reserves rose to $11.7 billion as of June 6 after the completion of the first review under the International Monetary Fund's Extended Fund Facility. The country expects $14 billion foreign exchange reserves by the end June. The bank paused its policy rate easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22%, and resumed it with a 100-basis-point reduction in May. Inflation in Pakistan has slowed markedly since peaking at around 40% in May 2023. However, last month it rose to 3.5% year-on-year, above the finance ministry's projection of up to 2%, partly due to the fading of favorable base effects. The central bank projects average inflation between 5.5% and 7.5% for the fiscal year ending this month. 'Going forward, inflation is expected to trend up and stabilize in the target range,' the MPC said. The escalating tensions in key oil-producing regions have triggered a sharp surge in global oil prices with brent, West Texas Intermediate (WTI) and Arab Light crude oils showing a 12% week-on-week increase and daily spikes exceeding 6%, Arif Habib Ltd, a Karachi-based research firm, said in its latest note. 'WAIT-AND-SEE' STANCE Amreen Soorani, the head of research at Al Meezan Investment Management, said the SBP's decision was primarily driven by emerging geopolitical risks that had affected international oil prices. 'Even with substantial improvements in Pakistan's inflation and external account, the central bank seems to have taken a cautious 'wait-and-see' stance,' she told Arab News. The regional tensions, she said, were posing potential challenges to Pakistan's balance of payment and inflation rate. Cash-strapped Pakistan spent $17 billion on oil imports last year. Soorani said petroleum was a major driver of Pakistan's trade deficit, accounting for approximately 30% of all imports and consuming around 55% of export proceeds. 'All else being equal, a $5 per barrel increase in average oil prices for the year would worsen our trade deficit by an estimated $900 million annually,' the analyst said. Pakistan is closely watching the global oil market, where brent and WTI crude traded at around $73.5 and $70.5 a barrel on Monday and fell 1% after opening lower in the Western markets, Finance Adviser Khurram Schehzad said. 'Global calls for increasing supplies is (are) one of the reasons among potential resolve of the Israel-Iran conflict by the US,' Schehzad said. Muhammad Waqas Ghani, head of research at JS Global Capital Ltd., said the SBP's current monetary stance was aligned with the IMF's recommendation to Islamabad to maintain a sufficiently tight monetary policy to anchor inflation. 'Additionally, the committee may have preferred to wait for greater clarity on the budget measures and their potential impact on inflation dynamics,' he told Arab News. STOCKS GAIN, RUPEE DECLINES Pakistani stocks gained by 82 points to close at 122,225 points 'despite geopolitical risk amid speculations over SBP policy announcement,' Ahsan Mehanti, chief executive officer at Arif Habib Commodities Ltd, said. The rupee declined for the fifth consecutive session and inched down 0.07% to Rs283.17 per dollar. Qazi Owais Ul Haq, a currency dealer at Arid Habib Ltd. said Pakistan's currency was 'feeling the heat' as regional tensions surge. 'They are trying to hold the rate but as a third-world country war affects us,' Haq told Arab News. Pakistan's top trade body, the Federation of Pakistan Chamber of Commerce & Industry (FPCCI) and the Karachi Chamber of Commerce and Industry, (KCCI) said the central bank's decision to maintain the policy rate at 11% was disappointing 'The SBP has not only ignored market signals but has also dampened business sentiment at a time when the economy urgently requires a boost,' KCCI President Muhammad Jawed Bilwani in a statement.
