Pakistan has recently announced that it has lifted import restrictions on a wide range of goods. The restrictions had been imposed on 826 items between 2017 and 2022, and their removal has been seen as a positive step towards reviving the International Monetary Fund's (IMF) Extended Fund Facility (EFF), which Pakistan is a part of. T
he decision has been made in accordance with the IMF's conditions for resuming its $6.5 billion loan program.
The State Bank of Pakistan (SBP) has withdrawn the condition of advance payment for the import of hundreds of items, effective from March 31, 2023. The condition had required importers to deposit up to 100% payment in advance for the import of certain goods.
The SBP had softened this requirement in August 2022, allowing traders to import goods on only 25% advance payment, while those due to make import payments after 180 days were required to submit zero margins. However, the latest circular has removed all restrictions on advance payment.
The goods freed from import restrictions include raw materials for cement and steel, vehicle parts, confectioneries, chocolate, mineral water, cigarette paper, electrical and electronic goods, and some machinery and parts.
The move is expected to reduce the liquidity requirement of importers, but the demand for US dollars may not immediately go down due to the limited foreign exchange reserves of $4.59 billion.
However, the government has been able to reduce the demand for imports by almost half to mitigate the risk of default on foreign debt repayment. Pakistan lifted the restrictions on imports after its current account deficit narrowed to a two-year low at $78 million in February 2023.
China, the second-largest economy, provided $1.7 billion last month and rolled over another $2 billion on Thursday, which enabled Pakistan to completely open imports. Multilateral and bilateral creditors, who have made financial commitments worth around $9 billion in flood relief, are still awaiting the IMF's approval before honoring their commitments.
The items freed from import restrictions include ice cream, butter, chocolate, cheese, fish, yogurt, natural honey, fresh dates, dry fruits, prickles, bulgur wheat, juices, mineral water, smoking tobacco, non-alcoholic beer, perfumes, makeup articles like nail polish and lipstick,
Raw material for steel, cement, and clinker, readymade garments, footwear, ceramics, electronic and electrical items, video games, wooden furniture, motorcycles, old used and reconditioned tires, tubes and their raw material, bicycles, diapers, granite and other stones, SIM cards, other live animals, other rice in the husk (paddy), other grain sorghum (jawar), microwave ovens, LCDs, and color television sets.
here is the list of items that were previously restricted but can now be imported into Pakistan without any restrictions:
- Raw material for cement and steel
- Vehicle parts
- Confectioneries (including ice cream, butter, chocolate, cheese, fish, yogurt, and natural honey)
- Mineral water
- Cigarette paper
- Electrical and electronic goods
- Machinery and parts
- Readymade garments
- Footwear
- Ceramics
- Video games
- Wooden furniture
- Motorcycles
- Old used and reconditioned tyres
- Tubes and their raw material
- Bicycles
- Diapers
- Granite and other stones
- SIM cards
- Other live animals
- Other rice in husk (paddy)
- Other grain sorghum (jawar)
- Microwave ovens
- LCDs
- Colour television sets.
