Pakistan bans luxury imports including cars and smartphones

A shopkeeper deals with customer at his mobile shop in Islamabad

Shehbaz-led government bans import of hundreds of items to tackle the economic crisis

Pakistan government has banned the import of hundreds of non-essential luxury goods as part of austerity measures to tackle the current economic crisis.

The ban on hundreds of items including cars, mobile phones and food items comes amid depleting foreign exchange reserves, the Pakistani currency plummeting to a historic low of Rs200 against the US dollar, and a rising import bill.

Prime Minister Shehbaz Sharif said that his government’s decision to ban non-essential items would help Pakistan save “precious foreign exchange.” He tweeted that “We will practice austerity and financially stronger people must lead in this effort so that the less privileged among us do not have to bear this burden.”

The banned imported items include automobiles, mobile phones, home appliances, fruits and dry fruits, fish and frozen food, juices, crockery items, private weapons, luxury leather apparel, shoes, carpets, furniture, cosmetics and shampoo, confectionery, kitchenware, sanitary ware and toiletries, luxury mattresses, cigarettes, ice cream and chocolates.

Emergency situation

Information Minister Marriyum Aurangzeb said Pakistan was currently facing “an emergency situation” and the country would witness the import ban on foreign exchange reserves within two months. She added that the austerity measure would benefit local producers and industries.

The austerity measures will help save $6 billion annually, said Aurangzeb while announcing the government’s fiscal management plan to deal with the economic crisis.

However, the opposition party member and former finance minister Hammad Azhar termed the ban ‘inconsequential’ and claimed that the government would only save “$99 million from a $6500 million/month import bill” as opposed to the $500 million savings claimed by the government minister.

Analysts have welcomed the ban on imports of luxury items instead of essential items to fix economic issues. “The essential items consumed by the middle class cannot be touched, so the burden has to fall on cutting the consumption of elites,” economic analyst Asif Arsalan H. Soomro told Gulf News. “Every little measure helps in the short term since we are time-pressed. Even saving $500 million a month matters because it means negotiating with IMF for another $0.5 billion that would have further covenants.”

Pakistan’s trade deficit rose to a record $39.3 during the current fiscal year, primarily due to imports of energy and food products amid spiking global commodity prices. The country’s imports surged to $65.5 billion during the 10 months (July 2021 - April 2022) while exports were recorded at $26.2 billion.