The federal cabinet banned the import of around 41 items for two months on Thursday to avert a looming default, but the measure appears to be insufficient, as it would reduce the import bill by only $600 million, or less than 5% of projected imports.
Imports of automobiles, mobile phones, cosmetics, cigarettes, food products, certain garments, and toiletries will be affected by the decision. Following a series of meetings at the Ministry of Finance and the Prime Minister’s Office, the federal cabinet approved the summary to prohibit imports through circulation.
“My decision to ban the import of luxury items will save the country precious foreign exchange. We will practice austerity and financially stronger people must lead in this effort so that the less privileged among us do not have to bear this burden inflicted on them by the [previous] PTI government,” PM Shehbaz Sharif tweeted.
He further stated that together “we will overcome all the challenges with resolve and determination”.
It is the coalition government’s first major policy decision, which will now be scrutinised by the World Trade Organization (WTO) and the International Monetary Fund (IMF).
The World Trade Organization encourages member countries to keep international trade open, but allows temporary restrictions under certain conditions, such as stalling a balance of payments crisis.
According to the cabinet decision, the import of the items has been prohibited in order to support the balance of payments position. It was decided that the prohibition would not apply to imports in rupees or via barter via land routes.
The federal cabinet decided that the ban on importing these items would be reviewed in two months.
Mobile phones in the completely built unit (CBU) form has been approved to be banned, while kits of phones coming into the country as SKD will be limited to half.
The cabinet also approved the total prohibition of CBU home appliances, cosmetics, fr,uit and dry fruits, frockery, pet food (cat and dog food), private weapons and ammunition, shoes, chandeliers, and lighting, headphones and loudspeakers, decoration pieces, sauces, and ketchup.
The other items that have been banned include doors and window frames, traveling bags and suitcase, sanitary ware, fish and frozen fish, carpets but except those imported from Afghanistan, preserved fruits, tissue papers, furniture, shampoos, cars, confectionery, luxury mattresses, and sleeping bags, jams and jelly, cornflakes, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, aerated water, frozen meat, juices, pasta, ice cream, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items and chocolates in retail packing.
To read our blog on “Govt. has explicitly banned the import of essential and luxury goods,” click here.