Would it work?

The central bank has finally imposed cash margins on import of as many as 404 items with immediate effect with a view to narrowing country's trade deficit. All it shows that the central bank is aware of and worried about the widening trade deficit and the concomitant problem of balance of payment position. Will this work? Or is it too late in the day?
The government has been blowing its bugle about the favourable reports appearing in the western media and the positive spin given by international credit rating agencies. The government, however, seems to have lost sight of the fact that trade deficit or balance of payment is characterised by two key components: outflows and inflows. While we have been concentrating on curbing outflows we have chosen to ignore the inflows which comprise export receipts, Foreign Direct Investment (FDI) and home remittances.
For a long time our exporters have been warning of slowdown and curtailed losing market share. Not only is textile package given to the textile sector too late, it is also woefully little. The FDI is also too small. And, home remittances have expectedly reached a plateau. But we have resisted depreciating the rupee and instead chose to tax the already taxed. We have created difficulties for the regulated sector and conveniently ignored the alarming growth of black economy.
Pressure on the rupee will rise and ultimately banks' interest rates will also rise. Both these factors will stoke inflation. Our food and oil import bills continue to rise with bulging population while exports continue to fall. Importers will loudly complain as the banks comply with SBP orders. Bangkok and Dubai will continue to thrive on 'Pak dollars'. Black economy will also continue to expand while we continue to ignore value-added sectors in our export drive.
People with black money will continue to thrive. They can afford to buy food stuff at any price. Imposition of additional duties did bring some comfort to the revenue hounds but the step was not enough in the long run. Importers will use Statement of Foreign Currency Deposits (FE-25) for imports rather than investment.
We need to level the playing field between the formal and informal sectors which requires raising of tax rate on non-filers. The technology gap and FBR's capacity need to be addressed. Let us implement the Tax Reform Group's report - not piecemeal but as a whole. We need to compensate the formal sector for acting as withholding agents. We must withdraw all final tax regimes and oblige all businesses to file tax returns. Strengthen the physical checks on all markets and the shops, especially those are widely known for dealing with smuggled goods. Review and tighten the quantitative and weight-based valuations. Promptly refund taxes when due and compensate when necessary. Raise withholding tax on all banking transactions for non-filers sufficiently. And encourage formalisation of real estate through RIETs, banks and stock-funds by reviewing the tax regimes. Harmonise inter-provincial and federal taxation. Let us allow deduction of provincial as well as local taxes from federal taxes. And, above all else curtail the discretionary powers of FBR. All this appears to be a tall order but these steps are critical to reducing the size of informal economy.
We must bridge the digital divide and create employment, as well as exports, by incentivizing the information technology and manufacturing which at present are heavily taxed. We need to move towards the social goals for broad-based development. These steps are critical to helping rupee protect and preserve its resilience on open market in particular.