Economic experts are skeptical of the government’s recent import ban measures of 38 non-essential luxury items, in attempt to contain Pakistani rising import account and stabilize it national economy.
Last week, in press conference, Minister of Information and Broadcasting Marriyum Aurangzeb insisted that such an “emergency” steps save Pakistan $6 billion a year. But economic and financial experts are not convinced.
“Import restrictions are an absurd response to Pakistan’s economic crisis. challenges— Shah Rukh Wani, Economist at the University’s International Center for Growth. of Oxford said Geo.tv“Fundamental problem it’s a disadvantage of export, not import.
Recently, liquid foreign exchange reserves in Pakistan have decreased to just exceeds $10 billion, while Pakistani rupee weakened to over 200 against United States dollar. To add to her woes, the country’s imports jumped to $65.5 billion in in first 10 months (July-April) of current fiscal year 2021-22.
According to forecasts, imports by the end of the year will be between 75 and 78 billion dollars. of June.
Read more: Which items It has government prohibited?
With reserves of just $16.16 billion left in the form of May 13 Pakistan barely has enough to cover imports for in next two months.
During such an economic emergency, reducing non-essential items from the import bill is treated as more of “populist” measure, not “substantial” one.
“These curbs won’t fix Pakistan trade deficit, – Vani explains, – like most of products under the import ban do up very small part of Pakistan import. Most significant items on in [list of] restrictions are cars and mobile phones, but with them, it won’t matter much.”
38 items now banned, please do up only 4-5% of Pakistan total import account, according to the assessment of brokerage houses, based on on data of in financial year 2021.
Considering that the larger chunk of country’s imports – petroleum, machinery, edible oils and chemicals, all of which are necessary for control economy.
Read more: Prime Minister Shehbaz ‘asks’ business community present solutions to Pakistan’s economic problems
There is one more problem. slicing out luxury items from import list also means decline in collection of tax revenues of Federal Council of Income (FBR).
in first ten months of current fiscal year 2021-22, over fifty% of The FBR revenue was collected at the import stage. If tax collection is reduced, then Pakistan will not be able to meet the upwardly revised tax collection target. of 6.1 trillion rupees.
“I also expect smuggling of these [banned] products will increase significantly over the next few months,” Vani warned.
However, JS Global, a brokerage and investment banking firm based in Lahore, expects positive results. results from the import slash. According to the firm’s report published last week, ban on in over three dozen items we will help save about 100 million dollars a month, which will become more clear over time.
A report published by Insight Securities, also last week is called steps “right in direction” but added what government chose “the easiest way» to combat pressure on foreign exchange reserves.
This measure is temporary. patch and much needed reforms required”, the company suggested. in his report, explaining that the decision party should instead make tough decisionsFor example, remove oil and electricity subsidies to the International Monetary Fund (IMF) on board.
Read more: Like turbocharged dollar scaled past several Asian currencies
It is estimated that with the end of subsidies on fuel, announced previous government, new finance minister can win tranche of $1 billion from the IMF.
However, this remains to see how The Fund will view these temporary measures by Prime Minister Shehbaz Sharif, as previously agreed with Pakistan, which during of IMF program Pakistan will not impose or increase restrictions on creation of payments and transfers for international transactions or change the practice of using multiple currencies or impose restrictions on imports for balance of payment purposes.
