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The State Bank of Pakistan (SBP) on Tuesday eased imports of several products, reversing steps taken in July requiring banks to seek prior permission before initiating any import transaction.
In July, the central bank had made it mandatory for authorized dealers (banks) to seek permission from its Foreign Exchange Operations Departments before initiating any import transaction. This had hampered imports, many of which are necessary for Pakistan’s export-oriented industries, as well as essential items, including food and medicine.
The circular issued on Tuesday seeks to course-correct, with the SBP urging banks to prioritize items by order of importance. It said primary priority should be allocated to essential imports such as food (wheat, edible oil, etc.) and pharmaceuticals (raw materials, life-saving medicines, surgical instruments including stents, etc.). In recent weeks, the pharmaceutical industry in particular had warned of a looming shortage if import restrictions were not eased.
According to the circular, the next order of priority is for imports related to petroleum (oil and gas) and coal (for power-based projects, subject to approval by the Energy Ministry), a key requirement in light of a prevailing energy and gas shortage nationwide. It also allowed imports for export-oriented industries, especially of raw material, input good and spare parts, potentially paving the way for the resumption of operations of several industries that were implementing temporary closures due to the lack of materials.
The central bank has allowed the import of agriculture imports—demand for which had been rising, especially in view of this year’s devastating floods and rampant inflation—such as seeds, fertilizers, and pesticides. It has also permitted imports on deferred payment basis, “preferably from the parent/sister concerns of importers, beyond 365 days, from shipment date.” Similarly, imports funded by foreign exchange available with the importers and raised through equity or project loan/import loan from abroad, in accordance with the applicable Foreign Exchange Regulations, have also been allowed.
Finally, the SBP has also allowed imports for export-oriented projects nearing completion where at least 75 percent of any project’s plant and machinery has already been imported.
The circular urged banks to “actively engage” with all customers to process their requests, keeping in view the customers’ risk profile and liquidity conditions prevailing in the foreign exchange market.