According to a report by ACE Money Transfer, a UK based company, illegal activities such as smuggling of dollars, oil and gold is draining Pakistan’s economy of a staggering $23b per year. These clandestine activities have far-reaching consequences. They distort exchange rates, leading to currency devaluation, which, in turn fuels inflation as imported goods become costlier. Moreover, such activities undermine the efficacy of monetary policies and erode confidence in the financial system.
One of the most alarming aspects of this issue is the impact on government revenue and the growth of a shadow economy. The revenue lost due to these unlawful activities could have been used to fund essential public services and infrastructure development. Furthermore, the shadow economy makes it harder for authorities to track and regulate economic activities, perpetuating a cycle of economic instability. In recent years, Pakistan has faced significant fluctuations in its exchange rates, exacerbating its economic challenges. However, there is a glimmer of hope in recent crackdown on these illicit activities, which has stabilised Inter-bank rate. As our country grapples with the daunting task of repaying a debt of approximately $70b over next three years, it becomes even more critical that such economic bleeding must be stopped with an iron hand. Addressing this issue head-on can significantly alleviate economic burden and provide the country with a much-needed financial respite.
The recent crackdown against smuggling is a positive step in the right direction. However, to consolidate these gains and ensure a sustainable recovery, further measures should also be taken. First and foremost, governance must be improved. A transparent and efficient governance system is essential for tracking and regulating economic activities effectively. Advanced surveillance techniques and technologies must be employed to secure the borders and crossing points, particularly those shared with Iran and Afghanistan. Collaboration with international organisations and neighbouring countries can also bolster our efforts in curbing this illicit trade.
