ISLAMABAD: Pakistan met another IMF condition despite dwindling foreign reserves as it removed all the restrictions imposed on imports which were aimed at slashing trade deficit – a strategy that worked well for the country but couldn’t satisfy the world’s top lender.
It means the government is doing whatever it could to please the IMF to get the stalled deal moving before its expiry on June 30 and ensure the release of over $1 billion in the next tranche despite the fact that Pakistan cannot afford free and large-scale imports amid the current financial crunch.
Through a circular issued Friday, the State Bank of Pakistan directed the commercial banks to release foreign reserves [US dollars] to clear over 6,000 containers currently stuck at the country’s ports.
“Given the representations received from various stakeholders, it has been decided to withdraw the above instructions (issued on Dec 27, 2022) with immediate effect,” the circular read.
The banks were previously advised to prioritise certain types of imports under different categories in the wake of poor foreign exchange reserves and a large trade deficit. Food (wheat, edible oil and other items), pharmaceutical, energy (oil, gas and coal), raw materials and spare parts, and agri inputs (seed, fertilisers and pesticides) were the prioritised imports in a bid to discourage luxury and unnecessary imports.
In the given scenario, experts and official sources are expressing the fear that the importers would continue to arrange dollars from the black market since the banks were out of foreign currencies.
Moreover, it may also again widen the gap between the official and open market dollar exchange rate which had been reduced to around Rs3 against the earlier figures of up to Rs20.
