Shortage of goods, plant closures: IMF identifies import curbs as the real culprits

ISLAMABAD: “Import suppression in Pakistan is inflicting shortages of goods and plant closures, undermining economic activity and revenue collection”.

This was stated by Esther Perez Ruiz, International Monetary Fund (IMF) Resident Representative in Pakistan, while responding to Business Recorder queries.

Replying to another question, the IMF official stated the financial framework underlying the policies agreed with the authorities is included in the staff report that will be released upon the IMF Executive Board’s approval of ninth review.

Pakistan imports declined by 28.44 percent during the first ten months (July-April) of the current fiscal year 2022-23 - from $ 65.519 billion last year to $ 46.887 billion during the current year. The country’s exports during July-April (2022-23) recorded at $ 23.174 billion against $ 26.247 billion in July-April of 2021-22, showing a decline of 11.71 percent.

Import curbs exacting terrible toll on businesses

The Large Scale Manufacturing Industry (LSMI) output declined by 8.11 percent during July-March 2022-23 when compared with the same period of last year.

Finance Ministry, in its monthly economic update, noted that Federal Board of Revenue (FBR) tax collection increased by 16.1 percent during July-April (2022-23), however, it remained less than the target.

The slowdown in economic activity and import compression is a major reason behind a significant lower-than-expected tax revenue during the review period. The ministry further stated that collection from customs duty declined by five percent primarily due to a decline in imports due to the import compression policy.

Copyright Business Recorder, 2023