As Pakistan conducts a nationwide crackdown to curb smuggling of the dollar and other commodities outside the country, a senior government minister acknowledged security forces are involved in the illegal activity.
Pakistan's caretaker government launched a nationwide crackdown last month to curb the illegal flight of the dollar — and unlawful money exchange and transfers — in a bid to strengthen the weak rupee.
With help from security and law enforcement agencies, authorities are also clamping down on hoarding and smuggling of wheat and sugar abroad and the influx of cheap Iranian petroleum products.
At a news conference highlighting the impact of the crackdown, caretaker Interior Minister Sarfraz Bugti admitted security forces are involved in smuggling.
Responding to VOA, the minister said it was "100 percent right" to say that security officials have a role in the illegal cross-border movement of currency and commodities.
"Smuggling hasn't happened on camel backs. It has happened via trucks," Bugti said. "The chief of Pakistan's military has told his people clearly … that there won't just be court martials but those who are involved in such practices will also be sent to jail."
The minister, however, said accountability of military personnel is a process not open to public scrutiny.
The Pakistani military is the country's most powerful institution. Despite a civilian caretaker government running the country until general elections are held next year, the head of the army, Gen. Asim Munir, is playing a prominent role in state affairs, much like his predecessors.
Receiving a briefing with top provincial government officials recently, the army chief pledged that a crackdown on smuggling and other illegal activities would continue "to rid Pakistan from the substantial losses it continues to suffer due to pilferage," according to a statement issued by the military's media wing.
Rupee's rise
Since the crackdown began a month ago, the beleaguered rupee has seen its fortunes turn around, emerging as the best performing currency globally in September.
According to data analyzed by Pakistani brokerage and research firm Arif Habib Ltd., the rupee gained more than 6 percent against the dollar last month. The currency rose to 287 to a dollar from a record low of 308 in September.
Bugti told the media that nearly $2.3 million has been recovered and 168 police reports have been lodged since the crackdown commenced four weeks ago.
In a recent report, the country's finance ministry also said the crackdown was paying dividends.
"The government's stern administrative action against the unlawful foreign exchange dealers and hoarders in commodity markets is stabilizing the exchange rate," the report said.
As Pakistanis, however, face crippling inflation with prices of essential items up nearly 31 percent from a year ago, experts say a crackdown on illegal activities alone will not strengthen the rupee or the economy.
"Even with the crackdown in place, the fundamental dearth of exports, [large] scale of imports, and debt repayment needs will inexorably weaken the PKR (Pakistani rupee) until the country's leadership finds the resolve to undertake structural reforms," said Ali Hasanain, associate professor at the Lahore University of Management Sciences (LUMS) in written comments to VOA.
In July, Pakistan escaped default when it secured a $3 billion, nine-month deal with the International Monetary Fund. Among many conditions, the fund demanded the country allow the free market to determine the exchange rate.
The crackdown on dollar smuggling and unlawful transfers of funds came as part of Pakistan's efforts to quell speculation about the value of the rupee against the dollar.
Analysts predict the rupee could further strengthen but that the economy will not be out of the danger zone any time soon as Pakistan must pay nearly $90 billion in external debt repayments over the next three years.
The foreign exchange reserves of the country's central bank, according to its most recent figures, stand at just above $7.6 billion.
