The government has lifted import restrictions on commodities intended for vehicle manufacturing, mobile production, solar power equipment, and nuclear reactors for power generation projects commencing in 2023, despite Pakistan’s limited foreign exchange reserves.
Simultaneously, authorised dealers (ADs – largely commercial banks) have been encouraged to prioritise the import of food and energy products. They should consider enabling the import of non-essential and luxury products after first providing for the necessities.
The State Bank of Pakistan (SBP) reminded ADs on Tuesday that for the past eight months, they had been required to obtain prior permission from the Foreign Exchange Operations Department, SBP-BSC, before initiating any import transaction involving HS Code Chapters 84, 85, and certain items of Chapter 87.
“It has now been decided to withdraw instructions (of prior permission) with effect from January 2, 2023. Consequently, requests for import transactions already submitted to SBP-BSC pertaining to referred HS codes stand returned to the ADs for appropriate disposal at their end,” the SBP said in the circular.
Arif Habib Limited (AHL) Head of Research Tahir Abbas said that the import system may “continue to work in its present form. The removal of restrictions will not re-open imports in a full-fledged manner.”
He stated that due to the country’s short foreign exchange reserves, the government has encouraged banks to first allow the import of necessary items before catering to others.
The SBP advised ADs (commercial banks) to “prioritise and facilitate the import of essential sectors such as food (wheat and edible oil) and pharmaceuticals (raw material, life-saving or essential medicines, and surgical instruments, including stents).”
According to Express Tribune, the second priority of ADs is to focus on energy imports “like oil, gas, and coal” (for power projects based on the merit order of the Ministry of Energy).
Imports for export-oriented businesses should be prioritised as well. They should facilitate “imports, especially of raw materials, input goods, and spare parts, by the export-oriented industries,” stated the SBP. Imports of agri-inputs should be the fourth priority of ADs, as explained by SBP: “import of items required as inputs for agriculture (seed, fertilizers, and pesticides).”
