ISLAMABAD: To avoid an impending default, the federal cabinet banned the import of roughly 41 products for two months on Thursday, but the solution looks to be insufficient, as it would only reduce the import cost by around $600 million, or less than 5% of expected imports. Pakistan bans imports of all non-essential luxury goods.
Cars, cellphones, cosmetics, cigarettes, food, some clothes, and toiletries will all be affected by the ruling. After a series of talks at the Ministry of Finance and the Prime Minister’s Office. The federal cabinet accepted the summary to limit imports through circulation.
My decision to ban import of luxury items will save the country precious foreign exchange. We will practice austerity & financially stronger people must lead in this effort so that the less privileged among us do not have to bear this burden inflicted on them by the PTI govt.
— Shehbaz Sharif (@CMShehbaz) May 19, 2022
“My decision to ban the import of luxury items will save the country precious foreign exchange. We will practice austerity and financially stronger people must lead in this effort so that the less privileged among us do not have to bear this burden inflicted on them by the [previous] PTI government,” PM Shehbaz Sharif tweeted. He further stated that together “we will overcome all the challenges with resolve and determination”.
World Trade Organization (WTO
Together we will overcome all the challenges with resolve and determination, InshaAllah! 🇵🇰 https://t.co/gIM7lqcjls
— Shehbaz Sharif (@CMShehbaz) May 19, 2022
It is the coalition government’s first significant policy decision. Which will now be scrutinized by the World Trade Organization (WTO) and the International Monetary Fund. The World Trade Organization (WTO) urges members to maintain international trade open but authorizes temporary limitations in specific instances. Such as stalling a balance of payments crisis.
According to the cabinet resolution. The import of the products has been forbidden in order to sustain the balance of payments position. It decided that the embargo would not apply to imports made in rupees or via barter through land routes.
Pakistan bans imports of all non-essential luxury goods.
The federal cabinet determined that the import ban on these commodities would be reconsidered after two months.
However, the initiative, which is also the coalition government’s first significant move, appears to be insufficient. According to a Federal Board of Revenue official. The import prohibition would reduce the monthly import cost by $280 million to $300 million. This represents only around 5% of the $6.6 billion monthly import bill.
Pakistan Tehreek-e-Insaf government
The previous Pakistan Tehreek-e-Insaf government set an import limit of $55 billion for the current fiscal year. The Pakistan Bureau of Statistics reports that it has already risen to $65.5 billion in the first ten months.
Imports are expected to reach $77 billion by the end of June, according to the Ministry of Commerce. The estimated savings of $600 million would be about 5% of the total.
Premier Shehbaz has mandated that imports be limited to $2 billion per month at first. The Ministry of Commerce and the FBR devised a strategy to reduce imports by $984 million per month by imposing a ban. It raises regulatory tariffs. Miftah Ismail, the Finance Minister, opposes implementing import restrictions and wants regulatory taxes to be greatly increased.
However, the prime minister rejected the plan to impose regulatory charges and instead chose to outright ban the import of roughly 41 commodities. As well as halve the imports of automobile components (Completely Knocked Down or CKD cars) and semi-knocked Down (SKD) mobile phones.
According to authorities familiar with the decision. The Engineering Development Board and the State Bank of Pakistan would enforce the quota limits on CKD automobiles and SKD mobiles.
The Imports and Exports (Control) Act of 1950 gives the federal government the jurisdiction to prohibit or restrict the import and export of any good or class of goods through an order published in the official gazette. The suggested list of non-essential commodities can be barred from entering the United States by including them in Appendix-A of the Import Policy Order (IPO) 2022.
IPO 2022
The ban will take effect from the date of publication of the notification. According to the cabinet, the Ministry of Commerce has issued the notification with immediate effect. However, as stated in the proviso to paragraph 4 of the IPO 2022, imports for which a bill of lading or irrevocable Letter of Credit granted before the notification of an amending order are exempt from the requirement.
The General Agreement on Trade and Tariffs (GATT) of 1994 establishes a framework within which WTO members can prohibit or restrict the import of any product for reasons of human, animal, and plant health and safety. Environmental protection, moral, religious, and security reasons, and to avoid balance of payments crises, according to the cabinet.
The IMF has been informed of the import embargo by the Ministry of Finance.
The State Bank’s currency reserves fell by $145 million to $10.16 billion during the week ending May 13, 2022.
Mobile phones in the completely constructed unit (CBU) form have been banned. While the kits of phones coming into the nation as SKD will be limited to half.
Imported Goods
Cosmetics, fruit and dry fruits, crockery, pet food (cat and dog food), private weapons and ammunition, shoes, chandeliers and lights, headphones and loudspeakers, decorative pieces, sauces, and ketchup were also fully banned by the cabinet.
Other items prohibited include doors and window frames, luggage and suitcases, sanitary ware, fish and frozen fish, preserved fruits, tissue papers, furniture, shampoos, cars, confectionery, luxury mattresses, sleeping bags, jams and jelly, cornflakes, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, aerated water, frozen meat, juices, pasta, ice cream, cigarettes, and shaving cream.
