KARACHI, Pakistan (Reuters) – Pakistan has banned the import of all non-essential luxury goods in a bid to stabilize the economy, the information minister said on Thursday, describing the situation as an economic emergency.
Pakistan’s current account deficit has spiralled out of control and its foreign exchange reserves have tumbled while the Pakistani rupee has plummeted to historic lows against the U.S. dollar.
“All those non-essential luxury items that are not used by the wider public, a complete ban has been imposed on their import,” minister Marriyum Aurangzeb told reporters.
She said the measures are to address fiscal instability, which she blamed on the previous government of Prime Minister Imran Khan, who was ousted in a no-confidence vote last month over charges of mishandling the country’s economy.
“There is an emergency situation in the country,” she said.
Among a host of imports to be banned are cars, cellular phones, home appliances and cosmetics.
It was not immediately clear how long the ban will be in place, but Aurangzeb said that along with other fiscal measures it would help save critical foreign exchange reserves for the next two months. She said the steps would save $6 billion annually.
Pakistan’s major imports are fuel and edible oil and pulses, which will remain unaffected.
Some projections see Pakistan’s current account deficit this financial year hitting around $17 billion or over 4.5% of GDP with a swelling import bill and spiking global commodity prices.
Pakistan’s foreign currency reserves have declined rapidly: funds held by the central bank fell $6 billion from $16.3 billion at the end of February to just above $10 billion in May.
Pakistan’s finance team is in talks with the International Monetary Fund in the Qatari capital Doha to restart a funding programme it began in 2019 but which has stalled over Pakistan’s implementation of policy actions required to receive funds.
(Reporting by Syed Raza Hassan and Gibran Peshimam; Editing by Angus MacSwan and Hugh Lawson)