ISLAMABAD, Aug 2: The government has decided to impose new taxes to reduce non-essential imports, fast eating up the country’s foreign exchange reserves that have declined to little over $10 billion, down from $16 billion over the past few months.

Finance ministry sources told Dawn on Saturday that the new taxation was needed because the issue had not been “adequately addressed” in the 2008-09 budget.

“If we want to be able to continue importing after two months, we will have to cut our import bill,” said an official.

He said the new trade policy should be renamed ‘export policy’ because it did not set any import targets.

Unofficially, he said, an import target of $37 billion had been set which was unsustainable and it would have to be cut drastically.

Sources said that a meeting of the monitoring committee had agreed on Friday that oil and food consumption in Pakistan had grown disproportionately, threatening to undermine the budget.

The committee would meet thrice a week to deal with rising prices and the import of oil and food items. All secretaries of the ministries had been directed to bring with them in the next meeting two proposals each to deal with these issues.

The Economic Advisory Committee has been empowered to propose new measures to deal with important economic issues and its recommendations would be accepted by the Economic Coordination Committee (ECC) of the Cabinet.

“It is a do-or-die situation. We cannot remain complacent about it,” a source said, conceding that the government was facing difficulties in securing new funds from overseas to improve its foreign exchange reserves position.

The advisory committee, sources said, had been asked to also propose viable measures to attract Foreign Direct Investment (FDI) which was stagnating because of poor law and order situation.