Thursday Jun 24, 2021
KARACHI: More ease in restrictions from international financial markets is being expected by the banking sector in Pakistan as the Financial Action Task Force (FATF) soon decides on the country’s compliance, bankers were reported as saying by The News Thursday.
“If Pakistan remains in the grey list, it still reflects somewhat positively as it suggests Pakistan is moving towards a fully compliant regime while steering clear of the black list,” a banker told the publication.
“Credit wise, markets reflect the status quo so there aren't any adverse implications expected. The focus remains on progressing towards exiting the grey list to ensure Pakistan can emerge as a stronger and economically/financially responsible country which can contribute significantly to global markets.”
The FATF will announce its future strategy for Pakistan tomorrow after the conclusion of its plenary meeting. Pakistan has already implemented 26 out of the 27 FATF conditions to curb money laundering and terrorist financing.
“Removal from the FATF's grey list will be credit accretive for Pakistan, as it affirms Pakistan's compliance with globally endorsed best practices,” a head of the treasury and financial institution at a leading bank told The News.
He said markets are expected to digest this development positively, and this will reflect across the global financial space - credit spreads on Pakistani debt may tighten, trade markets previously unwilling to deal with Pakistan may begin opening up, access to foreign currency liquidity will shore up.
This can spur lasting economic growth through increased exports in new markets (capacity expansion is already underway), introduction of new trading and financial partners i.e. more favourable terms in banking relationships and increased inflow of FDI, the banking sector official said.
Analysts and some financial industry watchers are hopeful that economic recovery will also gather more steam if Pakistan is out of the grey list soon.
A positive outcome from the FATF plenary hearing will help ease restrictions from global financial markets as well as help increase trading partners, according to a bank executive.
FATF had placed Pakistan on its “grey list” of countries lacking controls over money laundering and terrorism financing in 2018.
In February, the FATF put the country on a grey list and under increased monitoring till June, saying Pakistan needed to fully address 3 out of 27 points from the FATF action plan related to effective investigation and prosecution in relation to terrorist financing.