In an effort to combat Pakistan’s ongoing economic crisis, the caretaker government is considering imposing “prohibitive” regulatory duties on luxury and non-essential imports. Previously, Pakistan implemented a strict import ban to safeguard its foreign reserves, initially yielding positive results in the current account. However, when the government relaxed these restrictions, the Pakistani rupee rapidly depreciated, and the gains in reducing trade deficits were minimal compared to the damage inflicted on productive and export sectors.
Now, the government is preparing a more comprehensive plan that may expand the list of restricted products by at least 30 percent. This move raises concerns about the lack of a viable local industry to substitute for these imported goods. Moreover, there is a fear that illegal mafias may flourish, leading to a surge in smuggled goods infiltrating the markets. Past experiences have shown that such policies often result in increased costs for in-demand goods without effectively curbing smuggling.
Climate ‘countdown clock’ report launched ahead of key UN talks A more beneficial approach could involve seeking assistance from international lenders to restructure loan liabilities while focusing on enhancing local production. Relying on import restrictions or making imports prohibitively expensive may not be the ideal solution for Pakistan’s economic woes.
AMIN BALOCH
TUNK
