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Pakistan proposes “trade by barter” with Afghanistan


ISLAMABAD: Pakistan has proposed trade by barter with Afghanistan as tightening US sanctions hurt the ability to pay for basic staples.

Frustrations are mounting amongst Pakistani banks as Afghan banks shy away from processing trade-related transactions following tougher US sanctions against Taliban-controlled Afghanistan that hurt the landlocked country’s ability to settle trade deals.

The State Bank of Pakistan (SBP) has conveyed the issue to the Ministry of Foreign Affairs in a letter dated January 10, 2022 “with a request to diplomatically engage countries significant for correspondent banking and persuade them to provide comfort to their banks for allowing such transactions”.

The US had imposed restrictions on the central bank of Afghanistan viz Da Afghanistan Bank by freezing its accounts, “which increased difficulties for Pakistani banks in transferring money from Pakistan to Afghanistan for import-related transactions”.

The SBP, in a written reply to the Senate Standing Committee on Finance related to Afghanistan, also “proposed a barter mechanism for consideration of government of Pakistan (Ministry of Commerce) as an alternate for trade settlement with the neighboring country” in the wake of inactive banking channels and liquidity crisis in Afghanistan.

The trade ministry is in touch with Afghanistan to finalize the barter proposal.

“Given all such difficulties in trade with Afghanistan, the ministry of commerce has reportedly allowed 14 more items, in addition to currently allowed four perishable goods to be exported to Afghanistan without the requirement of Electronic Export Form in Pakistani rupees.”

Imports from Afghanistan have been allowed Customs without the requirement of Electronic Import Form for a limited time (45 days) till the barter mechanism gets finalized.

Afghanistan has been assessed as a high-risk jurisdiction after the Taliban takeover.

“Accordingly, correspondent banks have become reluctant to deal with Pakistani banks if they undertake any trade-related transaction where Afghanistan is involved.”

The SBP said Pakistan is already under increased scrutiny due to inclusion in the Financial Action Task Force (FATF) grey list, which includes jurisdiction under increased monitoring; correspondent banks frequently ask for additional information about all transactions routed through their accounts.


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