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Business Recorder
28-05-2025
- Business
- Business Recorder
Aurangzeb seeks roadmap for transition to a digital economy
ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a high-level meeting on Tuesday at the Finance Division to discuss a host of measures for advancing Pakistan's transition to a digital and less cash-dependent economy. The meeting brought together senior representatives from Pakistan's financial sector, including commercial banks, development finance institutions (DFIs), regulators, and investment experts who form the core of the Committee established by the minister to craft forward-looking recommendations to support Pakistan's transition towards a digital and less cash-dependent economy. Participants engaged in a comprehensive discussion on a series of key proposals aimed at fostering greater adoption of digital payments across the country. The group reached consensus on a range of measures intended to expand access to digital financial services, encourage the use of digital transactions, and reduce reliance on cash in everyday economic activity. Among the core areas of agreement was the need to ensure that digital payment options are widely available and accessible across various sectors, including retail, services, and public sector transactions. The participants supported steps that would encourage broad-based interoperability, leveraging Raast instant payments system in particular, leading to improved consumer choice in using digital payments platforms. It was also agreed that creating a more level playing field between cash and digital transactions is essential, and that incentive structures should be rebalanced to make digital payments more attractive and cost-effective for both consumers and businesses. The importance of improving cost structures related to digital transaction infrastructure, including merchant acquisition and service provision, was highlighted as a priority to enable wider outreach, especially for small merchants and underserved communities. Finance Minister Senator Muhammad Aurangzeb welcomed the Committee's recommendations and emphasised that digitalisation is central to Pakistan's economic modernisation agenda. He noted that increasing the footprint of digital payments will significantly enhance financial transparency, promote inclusion, and improve efficiency in both public and private sector operations. The Minister stressed that moving toward a cashless economy is not simply a policy aspiration, but a practical necessity for long-term fiscal resilience, competitiveness, and inclusive growth. 'Digitalization is the foundation of a modern financial system. We must move with urgency and coordination to create a payments environment that is inclusive, interoperable, and focused on ease of use for every Pakistani citizen.' He also underscored the importance of leveraging technology to simplify financial access for individuals and businesses while ensuring policy alignment across stakeholders. The meeting concluded with a directive from the finance minister for the committee to prepare a detailed and time-bound roadmap for implementation of these initiatives, to be submitted to the Finance Division for further action and policy consideration. Copyright Business Recorder, 2025
Express Tribune
28-05-2025
- Business
- Express Tribune
Cashless economy a necessity for fiscal resilience: FinMin
Federal Minister for Finance Muhammad Aurangzeb on Tuesday chaired a high-level meeting at the Finance Division to discuss a host of measures for advancing Pakistan's transition to a digital and less cash-dependent economy. The meeting brought together senior representatives from Pakistan's financial sector, including commercial banks, development finance institutions, regulators and investment experts, who form the core of a committee set up by the minister for crafting recommendations to support Pakistan's transition towards the digital economy. Participants engaged in comprehensive discussions on a series of key proposals aimed at fostering greater adoption of digital payments. They reached consensus on a range of measures intended to expand access to digital financial services, encourage the use of digital transactions and reduce reliance on cash in everyday economic activity. Among the key areas of the agreement was the need to ensure that digital payment options were widely available and accessible across various sectors, including retail, services and public sector transactions. The participants supported steps that would encourage broad-based interoperability by particularly leveraging the Raast instant payment system, which would lead to improved consumer choice in using digital payment platforms. It was agreed that creating a more level playing field between cash and digital transactions was essential and incentive structures should be rebalanced to make digital payments further attractive and cost-effective for both consumers and businesses. The importance of improving cost structures related to digital transaction infrastructure, including merchant acquisition and service provision, was highlighted as a priority to enable wider outreach, especially for small merchants and underserved communities. The finance minister, while welcoming the committee's recommendations, emphasised that digitalisation was central to Pakistan's economic modernisation agenda. He noted that increasing the footprint of digital payments would significantly enhance financial transparency, promote inclusion and improve efficiency in both public and private sector operations. Aurangzeb stressed that moving towards a cashless economy was not simply a policy aspiration, but a practical necessity for long-term fiscal resilience, competitiveness and inclusive growth. "Digitalisation is the foundation of a modern financial system. We must move with urgency and coordination to create a payment environment that is inclusive, interoperable and focused on the ease of use for every Pakistani citizen," he remarked. The minister underscored the importance of leveraging technology to simplify financial access for individuals and businesses while ensuring policy alignment across different stakeholders. The meeting concluded with a directive to the committee to prepare a detailed and time-bound roadmap for implementation of the initiatives. On Tuesday, Finance Minister Muhammad Aurangzeb also met with a delegation of the Pakistan Association of Large Steel Producers, led by Patron-in-Chief Abbas Akbar Ali. The delegation highlighted the critical challenges facing the steel industry, including high energy costs, regulatory inconsistency and the need for a stable policy environment to ensure long-term investment and growth. They also outlined the impact of tax policies on formal businesses and sought the government's support for creating a level playing field. The finance minister acknowledged the industry's concerns and reiterated the government's commitment to supporting the productive sectors of the economy. He noted that the steel sector was playing a pivotal role in infrastructure development and job creation and assured the delegation that their input would be considered in the ongoing budgetary meetings and policy discussions. He emphasised that Pakistan's economic revival required collective responsibility. "Every sector has to play its role in stabilising and growing the economy. We cannot allow the burden to fall solely on the formal sector and the salaried class," he stated. Aurangzeb elaborated that the government was pursuing a broad-based strategy to expand the tax base, reduce reliance on over-taxed segments and bring the undocumented economy into the fold. In this regard, the prime minister is leading regular meetings aimed at strengthening economic governance and enforcing equity across sectors. The minister encouraged continued dialogue between the industry and the government to align reforms with the practical ground realities. He reaffirmed the commitment to ensuring that economic policy was transparent, inclusive and growth-oriented.
Business Recorder
26-05-2025
- Business
- Business Recorder
Raast to reform: Digitizing Pakistan's economy
Digital payment systems are rapidly transforming economies across the globe by enhancing transparency, reducing informality, accelerating the velocity of money, and spurring inclusive economic growth. In this context, Pakistan's digital payment platform, Raast, has rapidly emerged as a cornerstone of the country's digital financial infrastructure. With over 43 million consumers, 841,000 merchants, and 36 banks onboarded, Raast now processes more than 4.5 million daily transactions. Its adoption has seen exponential growth, with transaction volumes surging to 371 million and values reaching PKR 8.5 trillion in Q1 FY25 alone. Unlike costly international card networks, Raast offers zero-cost, QR-code, and IBAN/mobile-based transactions backed by national scalability and full government integration. Since its inception, Raast has processed over PKR 34 trillion, significantly reducing reliance on cash and foreign payment networks. However, despite Raast's technical success, Pakistan continues to lag in overall digital payment adoption. This gap stems from a combination of structural and behavioural barriers. Structurally, the country suffers from low levels of digital and financial literacy, weak incentives for merchants, and fragmented onboarding processes. Behaviourally, Pakistan's heavy reliance on cash transactions presents a significant obstacle to economic progress—perpetuating informality, limiting tax revenues, and stifling investment potential. Currently, 25 percent of the country's total money supply—over PKR 9 trillion—is in cash circulation, far above the regional average of approximately 6.5 percent. This cash dominance contributes to one of the lowest tax-to-GDP ratios (10 percent) and one of the largest informal sectors (57 percent) among peer economies like India and Brazil. These challenges are further compounded by policy inertia and institutional hesitation, primarily driven by IMF-imposed revenue targets. India's remarkable success with its Unified Payments Interface (UPI) offers valuable lessons and actionable frameworks that Pakistan can adapt by leveraging Raast. Since its launch in 2016, UPI has reshaped India's financial landscape—processing an astounding USD 5.8 trillion by 2024, generating estimated savings of USD 109 billion and accounting for 83 percent of all digital payments in the country. This transformation was driven by strategic government spending, regulatory incentives, and tax benefits targeted at merchants, consumers, and financial institutions. As a result, cash transactions in India declined significantly, with the cash-to-GDP ratio falling from 14 percent to 11.5 percent, signaling a significant shift toward formal and traceable economic activity. Likewise, Pakistan can take targeted steps such as enforcing digital payment thresholds, offering tax liability reductions for merchants using digital platforms, and reducing withholding tax on digital transactions between suppliers and retailers. A Raast-based payment ecosystem offers zero-cost transactions, nationwide scalability, universal interoperability, and full government integration—unlike traditional card-based systems, which are costly, urban-centric, and result in significant foreign exchange outflows. By localizing payment infrastructure, Raast helps conserve foreign exchange, expand financial inclusion, and foster sustainable digital infrastructure. Pakistan must also consider disincentivizing cash usage to accelerate adoption by introducing incremental withholding taxes on cash payments. Furthermore, promoting widespread integration of merchants with the FBR's e-invoicing and digital POS systems could create a strong multiplier effect, enhancing transparency and fiscal accountability. Significantly, the revenue streams targeted for relaxation contribute minimally to overall tax collections. Thus, offering these incentives would not substantially impact fiscal revenues nor violate IMF conditionalities. On the contrary, such reforms could expand the economic pie by reducing informality and increasing the volume of digital transactions. Estimates suggest Raast could generate over PKR 1.1 trillion in annual economic benefits—partly through tax savings for the government but primarily through broader multiplier effects and reductions in transaction costs across the economy. The economic rationale is compelling: transitioning toward a cashless economy, as demonstrated by India's experience, significantly boosts the velocity of money. Faster circulation enhances consumption, stimulates business expansion, and strengthens economic dynamism—ultimately increasing tax revenue and supporting long-term growth. In essence, Raast—supported by innovative policy interventions and strategic incentives—has the potential to reshape Pakistan's economic landscape. Pakistan can unlock the true promise of digital financial inclusion by enabling businesses and consumers to shift away from cash, reducing informality, and enhancing transparency. With a clear understanding that short-term tax relaxations can yield long-term economic dividends, the country is well-positioned to negotiate pragmatic reforms and fully realize Raast's transformative potential. Copyright Business Recorder, 2025
Arab News
20-05-2025
- Business
- Arab News
Pakistan cenbank launches ‘cashless' Eid Al-Adha campaign to promote digital payments
KARACHI: Pakistan's central bank this week announced it has launched a 'Go Cashless' nationwide campaign aimed at promoting digital payments and reducing reliance on cash transactions within designated cattle markets in the days leading up to Eid Al-Adha. The State Bank of Pakistan (SBP) has undertaken efforts recently to encourage digital transactions in line with Pakistan's broader economic reforms, which are aimed at strengthening financial systems and increasing transparency in the country. Pakistan is a cash-dominated market where a significant portion of transactions, particularly in the informal sector, are conducted using cash. Millions of Pakistanis are expected to buy sacrificial animals this year at thousands of cattle markets across the country before the Eid Al-Adha festival in June. These cattle are bought mostly via cash each year. 'The State Bank of Pakistan (SBP) has initiated a nationwide 'Go Cashless' campaign to promote digital payments and reduce reliance on cash transactions within cattle markets during the upcoming Eid-ul-Azha,' the SBP said in a statement on Monday. It said the initiative is in line with the central bank's goal of fostering digital financial inclusion throughout Pakistan, and will run from May 20 until June 6 or the night of Eid Al-Adha. 'In partnership with the banking industry, the campaign aims to streamline the sale and purchase of sacrificial animals in 54 designated cattle markets across the country,' the statement said. The central bank said within these cattle markets, digital payment solutions can be utilized for various transactions, including the purchase of sacrificial animals, payment for necessities such as water and feed, and settlement of parking fees. The SBP said to support buyers and merchants, it has temporarily raised transaction limits effective from May 19 to June 15, 2025 for the following accounts: For branchless banking level-1 accounts, Asaan Account/Asaan Digital Account and Merchant Accounts, the SBP said it has eliminated daily transaction limits and increased the per-month limit to Rs5,000,000 [$17,694]. 'The public is strongly encouraged to take advantage of these convenient and secure digital financial services during the Eid-ul-Azha period,' the central bank said. Pakistan has witnessed significant growth in digital transactions in recent years. The SBP said in a statement last month that its instant payment system, Raast, processed over 892 million transactions amounting to Rs20 trillion ($72 billion) since its launch in 2021. In the second quarter of fiscal year 2025 alone, Raast handled 795.7 million transactions worth Rs6.4 trillion ($23.04 billion)., it added.
Express Tribune
19-05-2025
- Business
- Express Tribune
SBP launches 'Go Cashless' campaign ahead of Eidul Adha
Listen to article The State Bank of Pakistan (SBP) has launched a nationwide 'Go Cashless' campaign aimed at promoting digital payments in cattle markets ahead of Eidul Adha. The campaign, which runs from May 19 to eve of Eidul Adha, is designed to reduce cash-based transactions and encourage the use of digital financial services for buying sacrificial animals and related expenses. 'In partnership with the banking industry, the SBP is enabling digital payment solutions in 54 designated cattle markets across the country,' the central bank said in a statement. Digital transactions will be accepted for various services, including the purchase of livestock, payment for water, animal feed, and parking charges. اب منڈی میں کیش نہیں صرف قربانی کا جانور سنبھالیں۔ ادائیگی راست سے کریں جو ہے فوری، فری، آسان اور محفوظ۔ SBP #Raast #RaastQR #DigitalPayments# — SBP (@StateBank_Pak) May 19, 2025 The move builds on the success of similar efforts during Eidul Adha last year, with a focus on expanding adoption among merchants and buyers. To support the initiative, SBP has temporarily increased transaction limits from May 19 to June 15, allowing users greater flexibility in conducting large-value payments. 'The public is strongly encouraged to take advantage of these convenient and secure digital financial services,' the SBP added, noting that increased digital adoption would contribute to a more efficient and inclusive financial ecosystem in Pakistan.
