With the approval of a temporary ban on imported cars, the government wants to curtail its import bill to the tune of over $3 billion on annual basis
ISLAMABAD: The government has decided in principle to impose a temporary ban on the import of completely built unit (CBU) of vehicles [imported cars] for the next six months (Jan-June 2022) period as well as jacking up regulatory duty (RDs) and additional customs duty (ACD) on 10 to 12 other luxury items in order to curtail yawning current account deficit. With the approval of a temporary ban on the import of CBU, the government wanted to curtail its import bill to the tune of over $3 billion on annual basis.
The current account deficit (CAD) had touched $5.1 billion in the first four months (July-October) period of the current fiscal year (FY2021-22) against $2.3 billion, approved by the parliament and the National Economic Council (NEC) during the last budget 2021-22 for the whole fiscal year.
Now the government seems worrying that with the existing pace, the CAD might cross the $15 billion mark for the current fiscal year. The economic managers continued discussions with key stakeholders including ministries/ divisions here on Tuesday with the objectives to consider measures for curtailing the CAD.
Initially, it was learnt that the Prime Minister’s Office issued instructions to slap a ban on 10 luxury items, but ministries/ divisions opposed the move and argued that there might be severe backlash from the World Trade Organisation (WTO) and some bilateral trading partners.
In case, the government moves ahead with jacking up RDs and ACDs on remaining luxury items at the import stages such as cosmetics, pet foods, tyres, diapers and some other items, the import bill is going to be reduced.
“Every penny counts,” said one cabinet minister when asked whether the government was moving towards imposing a temporary ban on the import of CBU of vehicles for the purpose to avoid a balance of payment crisis.
One top official when contacted commented that there was a need to ascertain repercussions for imposing a ban on a few items because if the other trading partner reciprocated in the same manner, then it would have a devastating impact on our narrowed export base.
Finally, some sense prevailed and the government decided to slap a temporary ban on the import of just CBU for the next six months period.
Prime Minister Advisor on Finance and Revenues Shaukat Tarin has instructed the tariff board to hold its meeting immediately and grant approval on slapping a temporary ban on CBU of vehicles and increasing RDs and ACDs on selected few other luxury items.
This scribe also contacted Advisor to PM on Commerce Abdul Razak Dawood on Tuesday and asked him regarding instructions from the PM Office to slap a ban on luxury import items, he replied that he was abroad last week so he did not know about any such development.
However, with regard to an increase in exports, Abdul Razak Dawood said that Pakistan’s exports of goods fetched close to $3 billion mark in Nov 2021, the highest ever in a month. He said that the quality of exports was going well as the exports both in terms of quantity and prices were going up. The exports of value-added sectors were performing very well, he added.
He said Pakistan would achieve its desired target of exports of goods and services to the tune of $38.7 billion for the whole financial year 2021-22. The exports of goods were envisaged at $31.5 billion for the current fiscal year. He said that the exports of goods would touch halfway by touching the $15 billion mark by end of December 2021.