Shortage of goods, plant closures: IMF identifies import curbs as the real culprits

“In Pakistan, import suppression is causing shortages of goods and plant closures, undermining economic activity and revenue collection.”

Esther Perez Ruiz, International Monetary Fund (IMF) Resident Representative in Pakistan, stated this in response to questions.

In response to another query, an IMF official indicated that the financial framework underlying the policies agreed upon with the authorities is included in the staff report that will be released following the approval of the ninth review by the IMF Executive Board.

Imports into Pakistan fell by 28.44 percent over the first 10 months (July-April) of the current fiscal year 2022-23, from $ 65.519 billion last year to $ 46.887 billion this year. The country’s exports were $ 23.174 billion in July-April (2022-23), compared to $ 26.247 billion in July-April 2021-22, an 11.71 percent decrease.

The Large Scale Manufacturing Industry (LSMI) output declined by 8.11 percent during July-March 2022-23 when compared with the same period of last year.

Finance Ministry, in its monthly economic update, noted that Federal Board of Revenue (FBR) tax collection increased by 16.1 percent during July-April (2022-23), however, it remained less than the target.

The slowdown in economic activity and import compression is a major reason behind a significantly lower-than-expected tax revenue during the review period. The ministry further stated that collection from customs duty declined by five percent primarily due to a decline in imports due to the import compression policy.

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