Pakistan’s central bank has cleared all commercial banks and financial institutions for business with Iran, paving the way for the two countries to resume regular business activity that was hampered by years of sanctions.
Global transaction network SWIFT reconnected a number of Iranian banks to its system earlier this month, allowing them to restart cross-border transactions with foreign banks after the lifting of most sanctions on Tehran in January.
Iranian banks were disconnected from Belgium-based SWIFT, the Society for Worldwide Interbank Financial Telecommunication, in March 2012 as international sanctions against Tehran over its disputed nuclear program tightened.
“In line with the federal government’s decision to implement the United Nations Security Council Resolution regarding lifting of sanctions against Iran, the State Bank of Pakistan has communicated to banks/financial institutions that previous sanctions on Iran have been removed and normal business activities can be commenced within the scope of the Resolution,” the central bank said in a statement.
“It is expected that the lifting of sanctions and restoration of banking channels between Pakistan and Iran would revive normal trade and business activities between the two neighbors.”
Trade between Pakistan and Iran fell to $431.76 million in 2010-11 from $1.32 billion in 2008-09, according to the Trade Development Authority of Pakistan.
But tightening of sanctions on Iran made smuggling, particularly of petroleum products, extremely lucrative.
Major Pakistani exports to Iran include Basmati rice, plastics, paper and oranges, and the big imports items include liquefied petroleum gas, petroleum products, electric transformers and dry fruits.