KARACHI: The State Bank of Pakistan has eased imports of several essential items required as raw material and some basic needs of the exporters.
A circular issued by the SBP on Tuesday stated that the central bank had decided to withdraw its instructions with effect from Jan 2, 2023, paving the way for acceptance of requests for import transactions already submitted to the SBP.
Earlier, under circulars issued in May and July this year, the authorised dealers (banks) were required to seek permission from the SBP’s Foreign Exchange Operations Department before initiating any import transaction.
Though the main hurdle in the way of imports is the country’s poor foreign exchange that still persists, the State Bank came out to facilitate the economy heading fast to hit rock bottom.
Allows opening of LCs for seeds, fertilisers and pesticides
These restrictions were removed on Tuesday, but the central bank asked banks to prioritise items for imports under a list given by the SBP. Import of essential items such as food (wheat, edible oil, etc.), and pharmaceutical (raw material, life-saving/essential medicines), surgical instruments (stents, etc.) were allowed under the new circular. These sectors are under serious stress and shortage of medicines like life-saving drugs is common.
Energy, agriculture imports
The circular said that items related to petroleum group (oil and gas) and coal (for power projects based on merit order of the Ministry of Energy) could be imported without prior permission from the State Bank.
According to analysts, Pakistan cannot put restrictions on import of energy as industries across the country are facing serious crisis.
The State Bank also allowed imports by the export-oriented industry. It was a vital decision since the industry has come under pressure due to shortage of material and a decline in orders from the international market. Imports, especially of raw material, input goods and spare parts, by the export-oriented industries were allowed under the new circular.
Imports of agriculture inputs were allowed to improve the falling output and yields on crops in the country. The State Bank allowed the import of items required as input for agriculture (seeds, fertilisers and pesticides).
Due to the recent devastating floods, a large area of lands, particularly in Sindh, requires fertilisers and pesticides on a large scale. Pakistan needs to import about four million tonnes of wheat this year which could be met through improvement in yields per acre.
The State Bank also allowed imports on a deferred payment basis, preferably from the parents or sisters concerned of the importers, beyond 365 days, from shipment date.
Imports funded by foreign exchange available with the importers and raised through equity or project loan/import loan from abroad, in accordance with the applicable Foreign Exchange Regulations, have also been allowed.
The import for export-oriented projects nearing completion has also been allowed. The import of plants and machinery (at least 75 per cent already imported) has been allowed for export-oriented projects under the latest circular.
The State Bank said banks may actively engage with all their customers to process their requests, keeping in view the customers’ risk profile and liquidity conditions prevailing in the foreign exchange market.
Published in Dawn, December 28th, 2022