Prime Minister Imran Khan on Monday launched the country’s first instant digital payment system called “Raast”, which he said would boost the country’s formal economy.
Addressing the launch ceremony here, he termed the new system a “big step” towards realising Pakistan’s full potential, saying the country’s cash economy was a “big obstacle” for it to fully take advantage of its population of 220 million.
“The biggest loss [because of] the cash economy is [to] our tax collection. Pakistan is among the lowest tax collectors in the world,” the premier said, adding that out of a population of 220m, only two million were taxpayers.
Explaining how the low tax collection affected the country, the prime minister said that it meant “we cannot build our infrastructure. We cannot do human development. We cannot educate children or improve hospitals.”
“A country which 50 years back was advancing the fastest in the region, cannot [develop] because we do not have enough money [for it],” he lamented.
He said that the digital payment system would “slowly take people away from the cash economy” to a point where advantage could be taken of the country’s large population. Besides the shift towards his vision of ‘Digital Pakistan’, the system would also lead to the inclusion of people from the weaker segment of society, according to the premier.
“Another important aspect of this [is that] we include [people from the weaker segment of society] too in our development.”
He said that the government’s poverty alleviation initiative, Ehsaas, was using the system of mobile wallets and was considering incorporating women’s bank accounts into the programme. “Raast will take this forward,” he added.
“Our effort is that we bring financial inclusion to women, give them opportunities, open bank accounts for them, help them, give them livestock so they can themselves [improve] their standard of living and it becomes a source of livelihood for them. The Raast programme will help with this.”
The prime minister congratulated the State Bank of Pakistan for the way it “engaged overseas Pakistanis [and] the way remittances increased”.
“Never before have remittances increased like this,” he said, referring to the latest data by the SBP which showed that remittances from overseas Pakistanis during Dec 2020 rose by 16.2 per cent year-on-year to $2.436 billion, compared to $2.097b in December 2019, clocking in above $2b mark for the seventh consecutive month.
“It too is a big achievement of the SBP that our overseas Pakistanis who sent money through non-formal channels are now trying to send through formal channels.”
The benefit of the increased remittances could be seen in how the country’s current account had been in surplus for the last five months, the premier said, adding that the biggest benefit was a decrease in pressure on the rupee.
“As soon as the current account is in deficit, and fewer dollars come into the country while more go out, there is pressure on the rupee and as the rupee depreciates, the whole society is affected.”
The poor people were the ones most affected by this as import of everyday household items such as ghee and pulses became more costly. “It has an impact on everything.”
“So [when] the current account went into surplus, it took off a lot of pressure from our rupee,” the prime minister said, while appreciating the role of the SBP that he said had taken steps to encourage Pakistanis working overseas to send back money through formal channels.
“The effort of Raast is to boost our formal economy.” He once again congratulated the SBP and its governor, Dr Reza Baqir, saying they had to “think every day how we can bring the remittances through formal channels”.