KARACHI: Federal Minister for Finance and Revenue Miftah Ismail has said that the federal government had made tough decisions to help the country avert default by curbing imports to minimise the trade deficit and outflow of dollars.
“We are trying to curb imports through suspension of inward shipments of a few product categories,” he said during his visit to the Karachi Chamber of Commerce and Industry (KCCI) here on Saturday.
He said the current account deficit was also 17.5 billion dollars and the main reason for this is that Pakistan has now become a net importing country.
He said the situation improves for a couple of years and then problems arise again.
He said decisions have been taken to reduce imports to Pakistan.
He said the biggest problem is that Pakistan’s imports are eighty billion dollars while the country exported goods worth 30 billion dollars last financial year.
“I wish it was possible that Pakistan would have exports of eighty billion dollars and imports of thirty billion dollars,” he said, adding that if he had not gone to the IMF, everything would have been different.
He said Pakistan has to reduce the trade deficit in any case.
He further added that dollar was moving as per the demand and supply dynamics and the State Bank of Pakistan (SBP) had not intervened in the currency market. The rupee has seen an extremely volatile ride in recent weeks, closing at 239.94 on July 28 before appreciating nearly 7% in the next six sessions.
As authorities moved to curb imports, many have raised the question if suppressing inward shipments would also reduce tax collection.
“The Federal Board of Revenue (FBR) chairman is monitoring tax collections every day and he is concerned about the drop in customs duty collection as a result of contraction in imports; however, we are ready to face that,” he said.
“Import ban on CBUs of cars, mobiles and home appliances will remain in place till September 2022,” he said. Talking about the reversal of fixed tax regime, he admitted that before imposing the levy, he failed to take into account the small-scale shops such as Paan and cigarette kiosks.
“It was my mistake and if the government had not reversed the fix tax regime, small scale shops would have shut down,” the finance minister said. The federal minister said that he was never willing to go to International Monetary Fund (IMF) for loan but the circumstances compelled him to do so.
Miftah Ismail informed that five billion rupees have been spent on the post-flood situation in the country while floods in Balochistan have caused huge destruction.
He urged industrialists of Karachi to contribute to the Prime Minister’s Relief Fund. He urged the exporters to increase exports up to Rs 36 billion and after two or three months, inflation will also decrease.
“Stopping imports will further depreciate the dollar,” he concluded.
Copyright Business Recorder, 2022