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ISLAMABAD: Prime Minister Shehbaz Sharif on Wednesday approved a plan to slap a ban on the import of 50 ‘luxury items’, including cars, mobile phones, cheese, jams, frozen food items, fish, dried fruit, cosmetics and tyres.
Earlier, Wednesday, in the top functionaries meeting, chaired by Prime Minister Shehbaz Sharif, it was also decided that the Ministry of Industries and Engineering Development Board would be assigned to convince automakers to slash down imports of CKD (Completely Knocked Down) and Semi Knocked Down (SKD) cars. If the automakers did not cooperate with the government, then the import of different spare parts could also be considered for a complete ban.
However, the government does not want to impose a ban on the import of CKD and SKD cars and will seek cooperation from the industry players for slowing down imports for a few months period on account of balance of payment crisis.
Now this decision of imposing a ban will be linked to the approval of the World Trade Organization (WTO) and International Monetary Fund (IMF). The government has decided to consult the IMF review mission on the ban during the ongoing talks and then the federal cabinet’s approval will be sought to amend the Import Policy.
“We will have to follow a procedure to move ahead with imposition of ban on import of 50 luxury items. The WTO allows imposition of ban if its member country faces balance of payment crisis. But this ban can be imposed for a few months period only,” top official sources confirmed while talking to The News here on Wednesday.
The WTO consults with the IMF because it is the mandate of the lender of the last resort to gauge the economic health of loan recipient country. When the IMF certifies about the balance of payment crisis, then the WTO grants permission to slap ban on import of items for specified timeframe of few months period, ranging three to four months.
The decision is expected to be taken by the federal cabinet as Pakistani authorities are currently engaged with the IMF review mission in Doha (Qatar) to take them into confidence before moving ahead. However, the premier has granted his nod in principle to slap a complete ban on import of Completely Built Unit (CBUs) of cars, mobile phones, home appliances, frozen foods, ceramics, marbles and many other such items. “The government has estimated that the banning of luxury items in the range of 50 to 60 products could save $250 million on monthly basis,” top official sources confirmed while talking to The News here on Wednesday.
A high-level meeting chaired by Prime Minister Shehbaz Sharif considered different proposals for reducing the import bill. Pakistan’s import bill climbed to $65.5 billion in first 10 months (July-April) period of the current fiscal year and it is projected to touch $75-78 billion till end June 2022.
“We have decided imposing a ban on import of Completely Built Units (CBUs) vehicles, mobile phones, luxury food items such as frozen foods, fish, dry fruits (except Afghanistan) and many other items,” one senior official of the government disclosed on Wednesday.
The current account deficit surged to $13.3 billion for the first nine months and foreign currency reserves are depleting at an accelerated pace, so the government is left with no other option but to slap ban on import of 50 luxury items.
According to sources in the Federal Board of Revenue (FBR), a proposal to increase duty on the following items has been submitted: Regulatory duty on machinery will be up by 10% and home appliances by 50%; Power generation machinery regulations to go up by 30%; Steel products regulatory duty to go up by 10%; Duty on cars above 1,000cc to be up by 100% and 30% ACD
Regulatory duty on ceramics to be up by 40%; Duty on mobile phones to rise within a range of Rs6,000 to Rs44,000 per unit.
Meanwhile, the rupee dipped to another record low on Wednesday, falling past 200 to the dollar in the open market, continuing its sharp slide for the seventh consecutive session. It was trading at 200.50 versus the greenback, according to the rates quoted by the Exchange Companies Association of Pakistan. The local unit weakened by 2.50 rupees.
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