The federal government has given a “positive approval” to a proposed two-month ban on luxury items, despite decreasing foreign reserves and a growing trade imbalance. The federal government, on the other hand, has stayed mute on what could be called a luxury item. The information was obtained under the condition of anonymity from a Ministry of Trade source. According to rumors’, a ban on perfumes and other high-end commodities would be imposed, but no such ban will be imposed on the import of luxury Toyota V8s.
The suggested ban comes amid fears of an imminent economic emergency. The country’s apex trade body on Saturday proposed financial reforms, reduction in subsidies, launching of an amnesty scheme, and called on the government to impose an economic emergency. According to the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), “Subsidies on fuel and energy need to be withdrawn and contended that fuel and power subsidies must be rolled back on a priority basis as they are fiscally unsustainable,”. The chamber also asked to reduce the policy rate from 12.2 percent to 7 percent and urged the government to impose a ban on the import of luxury items.
The suggestion came as the new government’s willingness to make difficult decisions on its own was waning. Pakistan is currently facing a number of economic difficulties. The trade deficit in the country has surpassed $39 billion, the largest level in ten months. Furthermore, the country’s foreign exchange reserves are dwindling, with the foreign exchange reserves dropping by nearly $4 billion just weeks after the new government seized control. On Tuesday, the Pakistani rupee hit an all-time low versus the US dollar in the interbank market. To make matters worse, the country’s foreign inflows are dwindling.
Separately, the International Monetary Fund and the country’s partners have effectively refused to provide financial aid to the government and have imposed a number of conditions that must be met before a loan payment can be expected. According to analysts, the government would have to make hard decisions and face public scrutiny in order to strengthen the country’s economy and win financial subsidies from foreign organizations.