Recently Asad Umar told the media that Government decided to talk with IMF to take loans as country’s central bank holding just $8.4 billion in foreign reserves at the end of last month, down from $13.9 billion a year ago. As we know that before elections 2018, the Pakistan Tehreek-e-Insaf (PTI) promised not to go to the IMF. PTI told that they will generate funds by expanding the existing tax base and exploring other options. But PTI failed to generate funds in short term and at the end they reach out to the IMF for another financial bailout.
Foreign Currency Reserve or Foreign-exchange reserves (also called forex reserves or FX reserves) is money or other assets held by a central bank or other monetary authority so that it can pay its liabilities if needed, such as the currency issued by the central bank, debt, as well as the various bank reserves deposited with the central bank. Foreign reserve is acquired by different methods for example importing goods to other countries. When non-US countries like Pakistan trade with another country then they use USD or Euro to make and receive payments. They can use another currency like Euro, Yen etc. but USD is mostly used as it is the most acceptable and stable currency in international market. So when Pakistan sells rice to United States Pakistan gets USD. Similarly Pakistan can earn USD by exporting other goods.
What happens when a reserve bank runs out of foreign currency?
As country pay its liabilities in FX reserves so if reserve bank run out of foreign currency then the country wouldn’t be able to pay its liabilities such as debt in case of Pakistan now a days. Pakistan has to pay foreign debt in USD but Pakistan had $8.4 billion reserves at the end of September 2018. While Pakistan’s overall external financing requirements are estimated at $31 billion, which also includes the payments of debt. That’s why Pakistan requested IMF to take loans.
There are many ways to increase Foreign Currency reserve in Pakistan which are: bringing foreign investors to Pakistan, increasing exportation of goods to foreign countries and taking loans.
But here I am suggesting other options which can increase foreign currency reserve in Pakistan which is tourism. Many countries earn a huge amount from tourism sector. Malaysia earned 19785.95 million Dollar in 2016. Similarly China earned 114 billion USD in 2015. Pakistan is a country which has everything to offer for tourists from Arabian Sea to snowcapped peaks of Karakoram. But most people in the world consider Pakistan as a deserted country which has nothing to offer for tourism. Only few tourists know it which is mostly famous climbers and trekkers.
How Pakistan can earn from Adventure Tourism?
Gilgit Baltistan is located in the north of Pakistan. GB is the home to highest mountains of Karakoram, Himalayas and Hindukush. GB has everything to offer for tourists from lush green valleys to stunning lakes, waterfalls, meadows, deserts, historical places and ski resorts. In mountaineering, Pakistan can earn 120 million Dollars if 2000 climbers apply for mountaineering permit. The royalty fee for K2 is 6000 USD that is each climber has to pay 6000 USD in order to climb K2. Rates differ for other mountains based on their heights. Similarly trekking fee ranges from 1000 to 4000$ per member. Visa fee and other fees are excluded. If 0.1 million foreign tourists visit Gilgit Baltistan then Pakistan can earn 1 billion USD with average royalty fee 1000$ per member. These calculations are based on facts and fixed royalty fees by tourism department. Visa fees and other earning are excluded. Most profitable adventure tourism sectors are:
- Rock Climbing
- Heli Safari
The new government needs to take few steps in order to promote Gilgit Baltistan as tourist hub at international level. Pakistan can present GB as tourism friendly territory in the world. It should be cleared to the world that although there were terror attacks in past in different areas of Pakistan but GB was untouched by Terrorists. Although GB is safe for tourists but Government must provide security at every tourist places. Tourists must be exnsured of their security in GB.
The most important thing is to invest in infrastructure development in Gilgit Baltistan. Flights at Skardu and Gilgit Airport must be operated daily without any delay, and it must be all weather airports. Skardu airport must be upgraded to international airport so that tourists can directly fly from their home countries to Gilgit Baltistan. Visa process should be made simple and easy. There must be visa on arrival process. By taking these simple steps Pakistan can earn billions of Dollars from tourism sector.