Pakistani economic advisors are planning to ban imports of cheese, smartphones, and luxury cars in an extensive stratagem meeting on how to get around seeking a rebate from the International Monetary Fund (IMF), said a senior government advisor.
However, no formal decisions were made, but the promotion of uncompromising measures to wrestle Pakistan’s inflating by the freshly formed Economic Advisory Council (EAC) highlights the new government’s fortitude to elude another IMF bailout.
Presided by Finance Minister Asad Umar, who took over the office last month, the EAC conducted its first meeting last week.
A stillness in the Pakistani exports and a comparative flare-up in imports has resulted in a famine of dollars in the economy, exerting pressure on the local currency and diminishing foreign currency reserves.
The disturbed economic situation has driven the majority of the financial analysts to foretell that Pakistan will seek IMF’s help for its 15th bailout after the 1970s. On the contrary the new Prime Minister of Pakistan, Imran Khan has severely condemned the culture of Pakistan’s dependency and his party’s officials have also expressed their concerns regarding the severity and reforms that IMF may demand would throttle the promised government expenses.
Ashfaque Hasan Khan, one of the EAC members and a university professor stated that the Thursday’s meeting was focused on the out-of-the-box ideas that might possibly help restrain 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, however, remained unavailable for further insights on the EAC meeting. He told the Board that although Pakistan is in dire need to meet a $9 billion financial support, the IMF, however, remains only as a contingency preference.
Imran Khan further added that the additional radical measures were a year-long ban on imports of fruits, cell phones, cheese, and cars that could save around $4-5 billion. He further added that a thrust on exports could add up to $2 billion in extra inflows.
“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?”
In the previous year, the last government increased tariffs by up to 50% on 240 imported items, adding in high-horsepower cars and cheese. It also imposed regulatory duties on dozens of new imports. However, no absolute import bans were declared.
Recently Umar said Pakistan would not back-out from asking “friendly nations” – generally a secret code for historic buddies Saudi Arabia and China – for help to avoid going to the IMF, as well as raising money on international debt markets.
As Pakistan imports approximately 80 percent of its oil requirements, citing a jump in oil prices widened the current account deficit by 43% to $18 billion in the year.
To alleviate the current account pressures, The Central Bank of Pakistan has lessened the value of rupee four times since December, whereas the interest rates have seen hike consecutively three times in the year 2018.
Well, we all just hope that thinking out of the box will help Pakistan to put a stop on its ballooning deficit account.