PAKISTAN’S new government said it will ban the import of over 30 luxury items, including cars and fruit jams, in an austerity move to help boost its faltering economy.

The cash-strapped country has been hit by a storm of crippling debt, dwindling foreign currency reserves and galloping inflation.

The national currency hit a historic low yesterday, with 200 rupees fetching US$1 (RM4.40).

“My decision to ban (the) import of luxury items will save the… precious foreign exchange,” tweeted Prime Minister Shehbaz Sharif.

The move is an effort to target the elites, with the banned goods including cars and mobile phones – which make up the largest share of import bills on the list – as well as cosmetics and jams.

“We will be able to save US$6 billion by imposing a ban on import of luxury items,” Information Minister Marriyum Aurangzeb told a press conference, adding that the ban will be effective immediately.

“The decision will boost the local economy and industry”.

However, business leaders said the country must seek consent from the World Trade Organisation, which regulates international trade.

“I think it is a prudent step by the government… it will help save much-needed foreign exchange to pay off our international trade debts,” said Khalid Tawab, former senior vice-president of Pakistan Chamber of Commerce.

“The government has not declared a financial emergency yet, but that is the situation we are facing. So, under such circumstances the WTO could be persuaded to relax its rules.”

Pakistan’s current trade deficit stands at US$39.2 billion.

Former leader Imran Khan was ousted in a no-confidence vote last month, largely as a result of failing to reverse the soaring cost of living and prices of basic goods.

The announcement comes as officials are locked in negotiation with the International Monetary Fund in Doha, Qatar, over the release of funds as part of an agreed loan programme.

A US$6 billion IMF bailout package signed by Khan in 2019 was never fully implemented as his government reneged on agreements to cut or end some subsidies and improve revenue and tax collection.

Islamabad has so far received US$3 billion, with the programme due to end later this year.

Officials are seeking an extension to the programme through to June next year, as well as the release of the next tranche of US$1 billion.

A major sticking point is likely to be over costly subsidies – notably for electricity and fuel – and Finance Minister Miftah Ismail said he wants the two sides to “find a middle ground”. – AFP, May 20, 2022.