THERE is no doubt that tariff and non-tariff barriers on imports are bad for the economy as they put serious constraints on growth sustainability. However, the coalition government thought it best to temporarily stop the import of 38 non-essential and luxury items a little over two months ago to plug the haemorrhaging of meagre foreign exchange reserves since total inbound shipments surged to a record $80bn during the last fiscal against the target of $55bn on the back of a tough external environment. The latter features high commodity and oil prices and a hike in US interest rates. The import of another 25 products was also restricted by subjecting importers to prior State Bank approval. Now the government plans to gradually lift these restrictions as it expects dollar inflows from friendly countries in the current week to be followed by the release of IMF funds that will unlock other multilateral financial help to shore up our dwindling foreign exchange reserves. The decision was made to boost the depressive market mood although restrictions on mobile phones and automobiles will stay for an unspecified length of time. The expensive phone and automobile shipments already in the import process at the time of the announcement of the ban have nonetheless been cleared against the payment of an additional surcharge of 5pc to 15pc to save importers from losses.
The start of the removal of restrictions on specified products will also improve market confidence in the beleaguered government of Prime Minister Shehbaz Sharif and help reduce the prevailing economic uncertainty. Nevertheless, the government should refrain from overstretching itself and walk slowly. There are a number of items on the list of banned imports that we can do without. The import of such items must be made more expensive and difficult even when the ban is lifted. Despite multilateral and bilateral commitments, we are still far from standing on our own feet and simply cannot afford to lose our borrowed dollars to unnecessary imports for the wealthy.
Published in Dawn, July 26th, 2022
