PM Shehbaz Sharif approved a temporary restriction on the import of almost three dozen commodities, including critical and luxury ones, on Wednesday, but rejected to impose regulatory taxes to limit imports.
According to individuals familiar with the discussion, he also agreed to ban imports of various commodities, such as completely knocked down (CKD) autos & mobile phone kits, by half of the previous month’s imports.
According to Federal Board of Revenue sources, a summary will be submitted soon to seek cabinet approval of the measures, and a notice is expected within 48 hours.
According to a top govt official, the decision to prohibit certain commodities and put quantitative limitations on others will be short, lasting only two to three months.
The govt will find difficulties in obtaining IMF approval to impose import restrictions. It would also be required to notify the World Trade Organization of the sanctions, and the global free trade organisation will next seek feedback from the IMF on whether Pakistan’s economic situation merits such harsh steps.
The expected monthly impact of the restrictions is less than $300 million, indicating that the govt does not intend to substantially limit economic development in the current fiscal year preceding the next general election.
The prime minister dismissed plans to raise regulatory duties on imported products, as well as demands to restrict the import of cheese, chocolate, & other items mostly imported from Europe.
The European Union is Pakistan’s single largest export market, & the GSP + duty reduction plan helps Pakistan earn more euros.
However, such food products will be subject to quantity limitations in order to reduce the country’s dependency on the goods as much as possible without upsetting the country’s major export destination’s partner.
Prime Minister Sharif met with the economic advisers and thoroughly examined the ideas aimed at relieving stress on the external sector and the rupee, which has fallen to its lowest level ever – 198.64 to the dollar.
PM’s final approvals differed from his previous instructions this week when he urged the economic team to reduce monthly imports by $2 billion, or more than one-fourth of the typical monthly expense of $6.5 billion.
The government released a revised plan on Tuesday to lower imports by about $1 billion per month using a combination of tariffs and non-tariff actions. The strategy did not work out. However, the regulatory requirements might be enforced as early as the upcoming fiscal year.