SBP rolls back import restrictions from January 2, 2023

The State Bank of Pakistan (SBP) has decided to withdraw the restrictions placed on imports with effect from January 2, 2023, according to a circular addressed to the presidents and chief executives of all authorised dealers in foreign exchange on Tuesday.

“Attention of the Authorised Dealers (ADs) is invited to EPD Circular letter No. 9 of May 20, 2022 and Circular letter No. 11 of July 5, 2022 wherein ADs were required to seek prior permission from Foreign Exchange Operations Department SBP-BSC before initiating any import transaction pertaining to HS Code Chapter 84, 85 and certain items of Chapter 87,” it said.

“It has now been decided to withdraw the above instructions with effect from January 2, 2023. Consequently, requests for import transactions already submitted to SBP-BSC pertaining to above referred HS Codes stand returned to the ADs for appropriate disposal at their end.”

However, the central bank added that ADs may prioritise or facilitate imports under essential imports, energy imports, imports by export-oriented industry, imports for agriculture inputs, deferred payment / self-funded imports and import for export-oriented projects near completion.

ADs 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: SBP

Essential imports

These include goods which are related to essential sectors such as food (wheat, edible oil, etc) and pharmaceutical (raw material, life-saving/ essential medicines, surgical instruments including stents)

Energy imports

These constitute products related to petroleum group (oil and gas) and coal (for power projects-based upon merit order of Ministry of Energy).

Imports by export-oriented industry

These consist of raw material, input goods and spare parts that are used by the export-oriented industries.

Imports for agriculture inputs

Included in this category are items required as inputs for agriculture such as seeds, fertilisers and pesticides.

Deferred payment and self-funded imports

These consist of imports on deferred payment basis, preferably from parents/ sister concerns of the importers, beyond 365 days, from shipment date.

They also include imports funded by foreign exchange available with the importers raised through equity or project loan/ import loan from abroad, in accordance with the applicable Foreign Exchange Regulations.

Import for export-oriented projects near completion

The last category consists of import of plant and machinery for the export-oriented projects near completion where at least 75% of the project’s plant and machinery has already been imported.

The SBP said that ADs 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.

It advised the authorised dealers to bring the above instructions to the notice of all their constituents.

On December 8, SBP Governor Jameel Ahmad said in a podcast that “we recognise that administrative measures on imports must not be continued and we need to relax them gradually. From next year, we may review them and bring more ease to the businesses.”

It is pertinent to mention that foreign exchange reserves held by the SBP fell another $584 million to a critical level of $6.12 billion, data released on Thursday showed. This is the lowest level of SBP-held reserves since April 2014.

The low level of reserves was the reason behind the SBP placing restrictions earlier this year, much to the dismay of several importers and businesses in Pakistan that cited these curbs behind shutting down or scaling back of operations.