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[pak real cash]FATF grey-listing cost Pakistan $38 billion: Report

2021-8-4 source:ING club

  NEW DELHI: Cash-strapped Pakistan has suffered a massive loss of $38 billion due to its grey-listing by the Paris-based Financial Action Task Force (FATF), a research paper has found.

  The findings of the paper ‘Bearing the cost of global politics – the impact of FATF grey-listing on Pakistan’s economy’ comes amid FATF’s recent decision to keep Pakistan on its grey list following a review of its action plan items to curb terror financing.

  Read AlsoTerror funding: FATF keeps Pakistan on grey list

  Pakistan will continue to remain in the grey list of the Paris-based Financial Action Task Force as it failed to fully implement all the points of a plan of action set by it to curb terror activities. The anti-terror watchdog said that Pakistan has now largely addressed 24 of the 27 action items and

  The global body against terror financing on Thursday said that Pakistan will continue to remain on increased monitoring list as there are “serious deficiencies” in checking terror financing and the country lacks an effective system to deal with it.

  The research paper, published by Islamabad-based think-tank Tabadlab, said that Pakistan’s frequent grey-listing by FATF from 2008 to 2019 may have resulted in a cumulative GDP loss of $38 billion.

  ”A large proportion of this decline in GDP can be attributed to the reduction in household and government consumption expenditures, with real consumption in actual Pakistan $22 billion lower, relative to its counterfactual counterpart,” the paper said.

  It added that the greylisting has also led to lower levels of both exports and inward FDI.

  The paper said that FATF sanctioning between 2012 and 2015 cost Pakistan approximately $13.43 billion.

  It said that even though Pakistan saw itself out of the FATF’s crosshair in June 2015, it took a while for GDP to recover with an estimated loss of $1.54 billion in 2016.

  ”This implies that FATF sanctioning has short to medium run implications for the economy,” it said.

  The study further pointed out how Pakistan’s removal from the grey list even led to the revival of its economy, which was evident from an increase in the level of GDP in 2017 and 2018.

  It said that the removal from grey list in 2015 may have led to GDP gains in both 2017 and 2018. The paper observed that Pakistan saw its GDP rise marginally at $150 million in 2018, with the re-entry into the grey list wiping off most of the gains from the first half of the year.

  The declining trend then continued in 2019, with the country losing a staggering $10.31 billion in 2019, the paper showed.

  ”The overall findings suggest that real GDP in Pakistan witnessed a cumulative decline of about $38 billion relative to synthetic Pakistan over 12 years (2008-2019) as a result of FATF’s grey-listing,” the paper said.

  Pakistan and FATF

  Pakistan was placed on the “grey list” by the FATF in June, 2018 and was given a plan of action to be completed by October, 2019. Since then the country continues to be on that list due to its failure to comply with the FATF mandates.

  Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.


  The FATF is an inter-governmental body established in 1989 to combat money-laundering, terror-financing and other related threats to the integrity of the international financial system.

  It currently has 39 members, including two regional organisations — the European Commission and the Gulf Cooperation Council.

  India is a member of the FATF consultations and its Asia Pacific Group.

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