Decoded: Buna-Raast connectivity project between Pakistan-Arab world

The Pakistan government on Thursday launched the Buna-Raast connectivity project in Islamabad, aimed at linking the country’s digital payment ecosystem to the Arab world. 

Raast is Pakistan’s first instant payment system, which operates similarly to India’s flagship project: Unified Payments Interface (UPI). Meanwhile, Buna is a cross-border payment mechanism established under the Arab Monetary Fund.

How Pakistan hopes to benefit from Buna-Raast connectivity project

The Buna-Raast connectivity project will work to improve Pakistan’s digital financial ecosystem. On the launch, Pakistan’s Finance Minister Muhammad Aurangzeb said that the initiative would enhance transparency, particularly in remittances, taxation, and the power sector. With the project, cash-strapped Pakistan hopes to put itself on a sustainable path aligned with FATF or Financial Action Task Force requirements, the minister said.

 

FATF is the global watchdog responsible for ensuring that the global financial systems are not misused for money laundering or terrorism. Pakistan was on FATF’s ‘grey list’ from 2018 to 2022 for failing to tackle the issue of terror financing on its territory.

Being on the grey list negatively impacts a country’s reputation among global banks and investors.

Pakistan sees gradual macroeconomic stability 

In his address, Aurangzeb also said that macroeconomic stability was taking root in the country’s economy and noted that investors’ confidence in the country’s prospects was also growing.

Arab-backed Buna is a multi-currency payment, fully owned by the Arab Monetary Fund. The Arab Monetary Fund and the State Bank of Pakistan had signed the related agreements in connection with the deal in July, according to a press release available on Buna’s website.

With the project’s launch, Pakistani Rupee (PKR) has now been incorporated as a settlement currency in Buna. The first use case of Raast ‘bulk payments’ went live in 2021.

(With PTI inputs)