SBP allows 100% advance import payments

Pakistan’s central bank has allowed commercial banks to make up to 100% import payment in advance without acquiring prior approval, liberalising the import regime after the country’s foreign exchange reserves improved recently. The softening of trade instructions rules aims to instil confidence in foreign sellers and domestic buyers, potentially easing the hardships faced by traders on imports due to recent low reserves. However, this move may enhance demand for the greenback in the short to medium run. The State Bank of Pakistan (SBP) directed commercial banks to ensure that advance payments are not misused and remain in compliance with Trade-Based Money Laundering (TBML) regulations. The central bank stated that it would hold commercial banks responsible for ensuring imports are made within the given timeframe of 120 to 720 days, depending on the nature of the imported goods. Any delay in import against advance payment would trigger a penalty of 0.1% per day on the importers.