Pakistan and Arab Monetary Fund
Pakistan’s central bank officials announced that discussions are underway between the SBP and the Arab Monetary Fund (AMF) to establish a connection between Pakistan’s Raast payment system and the AMF-owned Buna payment system.
This connection aims to enable real-time, cross-border payments for overseas Pakistanis.
Raast is Pakistan’s first instant payment system, facilitating digital payments among individuals, businesses, and government entities in real time, Arab News reported today.
On the other hand, Buna, operated by the Arab Regional Payments, Clearing and Settlement Organization (ARPCSO), allows financial institutions and central banks in the Gulf and beyond to conduct cross-border payments throughout the day in real-time using various currencies.
Jameel Ahmed, the governor of the State Bank of Pakistan (SBP), stated that negotiations are ongoing with the Arab Monetary Fund. He said that AMF administers the Buna remittance project connecting all Gulf Cooperation Council (GCC) countries.
A Memorandum of Understanding (MoU) will be signed soon to connect Pakistan’s payment system with Buna, leading to significant improvements in the speed and cost of remittances.
This alignment of Raast with Buna aligns with the SBP’s “Strategic Vision 2028” and is a key objective in advancing the Pakistani central bank.
Sima Kamil, the SBP Deputy Governor, highlighted that remittances by overseas Pakistanis often face delays and unfavorable exchange rates. By linking Raast with Buna, which has connections to Gulf countries, the transfer of remittances will be expedited with better rates and lower costs.
The Pakistani central bank is currently exploring the advantages and disadvantages of the project, with discussions in the early stages. The process will involve signing an MoU followed by a pilot test before full-fledged cross-border payment operations can commence, which may take at least a year.
The Gulf region, particularly Saudi Arabia and the United Arab Emirates (UAE), is a significant source of remittance inflows for Pakistan. These countries employ 77 percent of the Pakistani labor force, as per the Economic Survey of Pakistan 2022-23. Pakistani workers in the Gulf contribute to the country’s foreign exchange reserves through remittances, which are vital for the economy. Establishing a link between Raast and Buna is expected to enhance the official channels for remittance flows from the Gulf region to Pakistan.
