ISLAMABAD: Pakistani economic advisors discussed banning imports of luxury cars, smartphones and cheese in a wide-ranging strategy session on how to avoid seeking a bailout from the International Monetary Fund (IMF), a senior government advisor said.
While no decisions were made, the floating of radical measures to tackle Pakistan’s ballooning current account deficit by the newly formed Economic Advisory Council (EAC) underscores the new government’s determination to avoid another IMF bailout.
The EAC held its first session last week, chaired by Finance Minister Asad Umar, who took office last month.
A lull in Pakistani exports and a relative spike in imports has led to a shortage of dollars in the economy, putting pressure on the local currency and dwindling foreign currency reserves.
That has prompted most financial analysts to predict Pakistan will turn to the IMF for its 15th bailout since the early 1980s. But new Prime Minister Imran Khan has criticized a culture of dependency and his party’s officials have expressed concerns that the reforms and austerity the IMF might demand would strangle promised government spending.
Ashfaque Hasan Khan, a university professor who is one of more than a dozen EAC members, told that during Thursday’s meeting, the focus was on outside-the-box ideas that would help curb imports.
“I didn’t find any member (who) suggested that Pakistan should go to the IMF because there is no other alternative,” he said. “We need to take some actions. ‘Do nothing’ scenario is unacceptable.”
Umar could not be reached for comment on the EAC meeting. He recently told the Senate that while Pakistan needs to meet a $9 billion financing requirement, the IMF should only be a fallback option.
Khan said the more radical steps discussed were a year-long ban on imports for cheese, cars, cell phones and fruit that could “save some $4-5 billion”. A push on exports could generate up to $2 billion in extra inflows, he added.
“You see how much cheese is coming in this country from abroad,” Khan said. “Market is full of imported cheese. Does this country, which doesn’t have dollars, deserve this, that it is importing cheese?”
Last year, the previous government hiked tariffs by up to 50 percent on 240 imported items, including cheese and high-horsepower cars, and imposed regulatory duties on dozens of new imports. But no outright import bans were issued.
Umar recently said Pakistan would not rule out asking “friendly nations” – usually code for historic allies China and Saudi Arabia – for assistance to avoid going to the IMF, as well as raising money on international debt markets.
The current account deficit widened by 43 percent to $18 billion in the year ended June 30, hit by a jump in oil prices. Pakistan imports about 80 percent of its oil needs.
To ease current account pressures, Pakistan’s central bank has devalued the rupee four times since December, while interest rates have been hiked three times this year.
A ban on items will open the door for smuggling, as is in the case of alcoholic items.
Administration in Pakistan is so corrupt that it can not impose government policies.
Soft measures useless. Start harsh actions from the top. Remove encroachments of Bilawal House & Raiwind, not Shadi Halls.
My humble suggestion is to import oil from Iran, as it would be a lot cheaper than what we are currently importing. Please also reduce forces budget.
it is a pity that ordinary consumer goods are being imported due to poor manufacturing industry of Pk. it is true that fruits, edible oil, cheese, shoes, clothes, computers, phones, cars etc are being imported. it is a good suggestion to stop or curtail imported items by at least US 5 billion. similarly oil sources to be explored from Baluchistan and Karachi sea seriously to find this black gold to reduce reliance on imported oil. Iran oil is an option but have to see it is compatible with technology of Pakistanis Car? for exports have to push all trade bodies and to ask them for suggestions and measures to boost exports. local manufacturers and farmers has to be also taken on -board for productivity improvement and to produce all those things which are being imported. it is embarrassing that we import grapes, apples, banana, cheese while are poor nation and should manage to grow / process in country which will reduce BOP and provide local jobs and sustainability to local industry. edible oil palm trees should be grown and refined in Pk to save US$ 2 billion imports bill in a long term policy.
Good step. Time to support and promote locally produced products.
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