The statement has been issued on the eve of the twentieth session of the Joint Commission for Economic Cooperation between Iran and Pakistan.
“SBP and CBI officials inked and agreement in Tehran on Friday to facilitate banking cooperation between the two sides within the framework of a Bilateral Payment Arrangement (BPA),” the statement reads.
Accordingly, Deputy Governor of SBP Riaz Riazuddin and Deputy Governor of CBI Gholamali Kamyab signed the agreement on behalf of their respective central banks.
The BPA seeks to provide a trade settlement mechanism to promote trade turnover between Tehran and Islamabad.
The mechanism will be used for payment of trade conducted via letter of credit (L/C) and in accordance with international laws and regulations.
The statement also noted that, as the next step, central banks of Iran and Afghanistan, will invite banks of the two countries to take force under the BPA in order to facilitate trade transactions.
Details of the mechanism will be issued by SBP in due course, it was further stated.
It said State Bank of Pakistan expects the agreement to deepen trade relations between the two parties.
The agreement has been signed just a few days before the 20th meeting of Iran-Pakistan Joint Economic Commission due on 17-18 of April in Tehran. As such, a Pakistani delegation will soon depart for Tehran.
Iran’s President Hassan Rouhani and Prime Minister of Pakistan Nawaz Sharif have repeatedly called for increasing trade turnover between the two neighboring countries to five billion dollars in coming years.
Inactive banking channels between the two countries mark one of the main reasons for the low volume of trade between Iran and Pakistan. In the current situation, the official trade turnover between Iran and Pakistan stands at about one billion dollars which remains a negligible and unsatisfactory figure in view of great potentials for economic cooperation between the two sides.
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