The federal cabinet on Thursday banned the import of around 41 items for two months to forestall a looming default but the measure appears to be too little, as it would contain the import bill by hardly $600 million or less than 5% of projected imports.

The decision will hit the imports of cars, mobile phones, cosmetics,the  cigarettes, food products, certain garments, and toiletries. The federal cabinet approved the summary to ban the imports through circulation after a series of meetings held at the Ministry of Finance and Prime Minister’s Office.

It is the first major policy decision that the coalition government has taken, which will now pass through the scrutiny of the World Trade Organization (WTO) and the International Monetary Fund. The WTO encourages member countries to keep international trade open but allows temporary restrictions under certain circumstances including stalling a balance of payments crisis.

Import of the items have been prohibited to support the balance of payments position, according to the cabinet decision. It decided that the prohibition will not apply on the imports in rupees or through barter mechanism by land routes.

The prohibition on import of these items may be reviewed after two months, the federal cabinet decided.

However, the step, which is also the first serious move by the coalition government, appears to be too little. The prohibition of imports would curtail the monthly import bill by $280 million to $300 million, according to the Federal Board of Revenue official. This saving is hardly 5% of the monthly import bill of $6.6 billion.

The Ministry of Commerce has projected that the imports would now grow to $77 billion by the end of June. The projected $600 million saving would be around 5% of the annual bill.

Premier Shehbaz had initially directed to contain the imports by $2 billion per month. The Ministry of Commerce and the FBR had prepared a plan to cut the imports by $984 million a month through ban and an increase in regulatory duties. Finance Minister Miftah Ismail was against imposing restrictions on imports and desired that the regulatory duties be significantly increased.

The prime minister turned down the proposal to slap regulatory duties and instead decided to completely ban the import of around 41 goods in addition to restricting the imports of components of cars (Completely Knocked Down or CKD cars) and semi-knocked down (SKD) mobile phones by half.

The cabinet decided that the ban will take effect from the date of publication of the notification and the Ministry of Commerce issued the notification with immediate effect. However, as provided under proviso to Para-4 of the IPO 2022, the imports for which the bill of lading or irrevocable Letter of Credit was issued prior to the notification of an amending order shall be exempt from the ban.

The Ministry of Finance has informed the IMF about the ban on certain import items.

The items that have been approved to be banned included mobile phone in completely built unit (CBU) form while the kits of the phones coming into the country as SKD will be curtailed to half.

The cabinet also approved to completely ban the home appliance in CBU form, cosmetics, fruit and dry fruits, frockery, pet food (cat and dog food), private weapons and ammunition, shoes, chandeliers and lighting, headphones and loudspeakers, decoration pieces, sauces and ketchup.

The other items that have been banned include doors and window frames, travelling bags and suitcase, sanitary ware, fish and frozen fish, carpets but except those imported from Afghanistan, preserved fruits, tissue papers, furniture, shampoos, cars, confectionary, luxury mattresses and sleeping bags, jams and jelly, cornflakes, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchen ware, aerated water, frozen meat, juices, pasta, ice cream, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items and chocolates in retail packing.

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