Pakistan forbids the import of luxury vehicles, cosmetics, and other commodities in order to alleviate the country’s financial crisis: Report

According to media reports, the Pakistani government agreed on Wednesday to put a restriction on the import of non-essential and luxury commodities in order to avoid a financial catastrophe due to diminishing foreign reserves.

As per the sources, the prime minister has prohibited the importation of luxury automobiles and other non-essential commodities like cosmetics, for which directives have also been given.

They went on to say that the decision was made due to the growing trade imbalance and that after consulting with his coalition partners, Prime Minister Shehbaz determined that the government will take strong measures to stabilise the ailing economy.

The US dollar has seen a record spike in recent weeks and was trading yesterday at moreover Rs 200 in the open market, indicating a lack of confidence among financial industry participants, according to the report.

A request to increase tax on some commodities has been presented to the Federal Board of Revenue (FBR), according to FBR sources.

This will result in a 10% increase in regulatory tax on machinery and a 50% increase in regulatory duty on household appliances. The duty on automobiles with displacements of more than 1,000cc will be increased by 100%. As per the report, mobile phone duty would rise from Rs 6,000 to Rs 44,000 per unit.

The restrictions on non-essential imports came as Pakistani authorities and IMF representatives began discussions in Doha on Wednesday to restart the stalled USD 6 billion Extended Fund Facility (EFF) programme.

According to the Business Recorder daily, its resurrection is critical for Pakistan’s cash-strapped economy, which has seen its foreign exchange reserves fall in recent weeks due to import payments and debt service.