• Minister claims move will save $500m monthly, FBR differs
• Decision to ban mobile phone imports, knocked-down cars reversed

ISLAMABAD: In a bid to contain the rising import bill to minimise pressure on the country’s dwindling forex reserves, the government slapped a ban on the import of nearly 800 items in 33 categories, including food products, on Thursday.

A four-page notification, SRO598 of 2022, was issued late at night by the commerce ministry to amend the import policy order. The banned items in the notification also included mobile phones, but soon after the announcement, the ministry revised its decision, opting instead to double the import duties and taxes levied, instead of outrightly banning their import, a senior customs official told Dawn.

The official further claimed that duties have also been increased on completely knocked-down (CKD) vehicles, and that both decisions are expected to be announced on Friday.

The government’s decision sparked criticism from within and without, as experts seemed convinced that the decision will have a multiplier effect on existing inflation, as the ban on import of food items would lead to a rise in prices of alternative domestic products.

The decision comes as the dollar soared to new heights, crossing the psychological threshold of Rs200, driven by a rising import bill, growing current account deficit and depleting foreign exchange reserves.

During a press conference on Thursday, Information Minister Marriyum Aurangzeb assured the nation that PM Shehbaz Sharif was “working day and night to stabilise the economy”, adding that the banned items did not include any that were widely used by the general public.

She declared that it was “an emergency situation” and Pakistanis would have to make sacrifices.

“We will have to reduce our dependence on imports,” she said, adding that the government was now focusing on exports. The minister said that under the government’s economic plan, local industries would prosper while employment opportunities would also rise.

Elaborating the government’s decision, she said the ban will not affect those importers who had already booked their orders and paid their vendors. “The dollars which have been spent on import of different items cannot come back. Therefore, the ban will not apply to those orders,” she said.

“Import orders where the letters of credit have already been opened or where payment had been made would be processed, but no new ones would be entertained,” she added.

The restrictions on import of these items will also not apply to barter trade, which is currently taking place with Iran, and trade in rupees, especially with Afghanistan.

Pakistan’s total import bill reached $65.53bn in 10MFY22 from $44.73bn over the corresponding months of the previous year, reflecting an increase of 46.51 per cent. In April 2022, the import bill reached $6.4bn against $5.3bn over the previous year, reflecting an increase of 27.4pc.

In April, nearly $4bn, or 62pc of the import bill, was down to import of petroleum products, food items and agriculture/chemical products.

Conflicting claims

The decision triggered conflicting claims about the import value of the restricted items and the efficacy of the decision to contain the rising import bill. According to Marriyum Aurangzeb, the monthly impact of these measures will be $500 million.

The prime minister secretariat estimates the impact of these measures in the range of $250 million to $300m per month. However, the Federal Board of Revenue estimates the monthly import value to be between $300m and $350m.

Former energy minister, PTI’s Hammad Azhar, said that non-oil current account deficit stands at just under $1bn. These measures will be inconsequential, he contended.

It is also believed that the impact of the ban will not be witnessed in the current fiscal year, which ends next month; rather its benefits will come to the fore over the next financial year, i.e. 2022-23. Under the rules of the World Trade Organisation, a member country may apply import restrictions for balance of payment reasons.

Banned items

In the food category, confectionery, jams & jelly, fish & frozen fish, sauces, ketchup etc, fruits and dry fruits (except from Afghanistan), preserved fruits, cornflakes, frozen meat, juices, pasta, aerated water, ice cream and chocolates (in retail packing) are on the banned list.

Other categories include home appliances, cosmetics, crockery, pet food, private weapons & ammunition, shoes, chandeliers & lighting (except energy savers), headphones & loudspeakers, doors and window frames, travelling bags and suitcases, sanitary ware, carpets (except from Afghanistan), tissue paper, furniture, shampoos, automobiles (CBU), luxury mattresses & sleeping bags, bathroom ware/toiletries, heaters/blowers, sunglasses, kitchen ware, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items like hair dryers and decoration/ornamental articles.

Published in Dawn, May 20th, 2022