A Failing Economy and the Ban on Imported Luxury Goods

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The federal cabinet has imposed a ban on imported luxury goods. This decision comes to counter the country’s failing economy and has been labelled as an “emergency economic plan”. The list of goods that have been banned contains 41 items, including cars, fruit jams, electronic devices, and other non-essential goods. This decision comes after the rupee hit an all-time low at 200 PKR, worth 1 USD. According to Prime Minister Shahbaz Sharif, this decision will save the country precious foreign exchange and will only be a burden on the more privileged citizens of Pakistan. He also took this opportunity to criticize the economic reforms of the previous government and stated that their economic policies only affected the poor and the needy.

Although many people think that this move may be too little, according to the Federal Board of Revenue official, the prohibition of luxury imports would cut the monthly import bill by $280 million to $300 million. This saving is hardly 5% and won’t even make a dent in the monthly import bill of $6.6 billion. Moreover, the current government must consult the World Trade Organization before imposing a nationwide ban on imports, as the WTO encourages member states to keep international trade open. Only temporary restrictions are allowed under certain circumstances, such as stalling a balance of outstanding payments.

The ban on non-essential imports came as Pakistani government officials and the International Monetary Fund (IMF) representatives commenced talks in Doha on Wednesday to revive the stalled USD 6 billion Extended Fund Facility (EFF) programme. This fund has been termed crucial for Pakistan’s economy, seeing its foreign exchange reserves plummet amid import payments, and Pakistan’s current trade deficit stands at $39.2 billion.

Former Prime Minister Imran Khan was ousted in a no-confidence vote last month. This was mainly a result of failing to reverse the soaring cost of living and prices of essential goods. The current government continues to label their predecessor as “economic terrorists” and have shifted all the blame to its shortcomings. According to the current information minister, Maryam Aurangzeb, the ban on imported items is the key to stabilizing the economy.

This decision is somewhat ironic, considering the current government is seen as a foreign or “imported government” itself. Imran Khan and his supporters have declared the move to oust him from power a foreign conspiracy. Many Pakistan Tahreek Insaaf (PTI) supporters have taken to the streets and social media to declare that they will not accept a foreign government.

Pakistani citizens may have to brace for a second economic inflationary period. This period will impact lower and middle-class households the most, and simply banning imported goods may not be the saving grace the current government hopes it to be.

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Musa Qaiser
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