Islamabad (September 10, 2018): Pakistani economic advisers have considered to ban imports of luxury cars, smartphones and cheese in the country.
According to details, in a wide-ranging strategy session on how to avoid seeking a bailout from the IMF, a senior government adviser said that they have discussed banning imports of luxury cars, smartphones and cheese.
The EAC held its first session last week, chaired by Finance Minister Asad Umar, who took office last month.
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.
A soothe 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.
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.
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.
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.
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