By Sarmad Ali
Islamabad (Pakdestiny) Finance Minister Ishaq Dar is repeating the scene of 1998 when he had frozen the foreign accounts and brought the economy to virtually collapse. The same is going to happen as the banks are near bankruptcy for his ‘withholding tax policy’.
To the astonishment for everyone the commercial banks’ deposits have witnessed a decline of Rs120.7 billion in two months – July and August – because of withholding tax of 0.3% on cash transaction of more than Rs 50,000 within the banking channels.
It will be interesting to see how Dar stops the withdrawal of billions of rupees from commercial banks which are facing bankruptcy. In fact the whole economy will be down if the banks’ gone empty.
Statistics of the State Bank of Pakistan (SBP), which where updated on Monday, revealed that the commercial banks’ deposits reduced by Rs 86.50 billion in August and Rs 34.21 billion in July to stand at Rs 9.02 trillion.
The decline has been witnessed since July after seven months constant growth in the deposits values in the accounts of the commercial banks, but it seems that deposits of the banks may continue its downward trajectory in coming months if the issue of tax is not settled with the government.
The analysts have said that the falling deposit rates of commercial bank due to easing of monetary policy would also be one of the contributing factors of this trend but the major force behind the scenario is the boycott of banking channels and outflow of deposits by the consumers.
Till September, the central bank has already injected more than Rs 1 trillion twice and four injections of Rs 50 billion, Rs 133 billion, Rs 169 billion and Rs 61 billion, respectively.
The bankers and traders said the banks transactions declined in the past week as a score of banking consumers stayed away from the banking system to avoid tax, whereas they used old system of cash for their financial needs for domestic and commercial purposes. The banks have been facing shortage of funds. Pakdestiny