Pakistan 1st mini-budget of this fiscal year to render luxury imports 'out of reach'

Islamabad [Pakistan], August 20 : Pakistan's Finance Minister Miftah Ismail on Thursday unveiled fresh revenue measures of over Rs 50 billion in the first mini-budget of this fiscal year, however it will render luxury imports "out of reach" for its citizens.
Addressing a press conference in the federal capital, Ismail said the Prime Minister Shehbaz Sharif was not in the mood to let luxury imports flow in while the government's priority was to provide for food items and arranged imports of one million tonnes of wheat, 200,000 tonnes of urea, cotton, edible oil and pulses, which helped control prices, reported Dawn.
Therefore, with limited dollars, Pakistan's choice was easy to feed its 230 million citizens instead of luxury imports like Mercedes, iPhones and home appliances.
"But since this is a demand of the international community, we are lifting the ban on imports and replacing it with prohibitive regulatory duties of 400 pc to 600 pc so that fewer dollars be spent on luxury imports," he said, adding that the government would impose thrice the existing regulatory duties --maximum permissible under WTO rules -- on completely built units (CBUs), or finished goods.
"With my limited resources, I will prioritise flour, wheat, cotton and edible oil instead of iPhones and cars. We will remove the bans but impose prohibitive duties in the form of regulatory duties, customs duties and sales tax, so their import does not materialise," he said.
Ismail announced the lifting of a ban on imports of non-essential and luxury goods. The ban, which was introduced in May, was meant to protect foreign currency reserves.
Ismail said that when the ban was introduced, the Shehbaz Sharif government was primarily thinking about providing basic necessities to the population as the country had a limited amount of dollars.
The ban was lifted on all non-essentials, or luxury, imports to meet yet another lateral demand of the International Monetary Fund (IMF) before it clears Pakistan's bailout package later this month, reported Dawn.
He said some of the other proposed tax relief measures for real estate, capital markets, banks and so on had been postponed for now.
The minister said Pakistan had completed all conditions and prior actions required by the IMF under the 7th and 8th reviews for the disbursement of USD 1.18bn and complied with an additional funding arrangement of USD 4 billion from Qatar, Saudi Arabia and the United Arab Emirates and re-rolling of payable debt by China, reported Dawn.
"However, the Fund wanted clarity on certain issues," the minister said and explained that the import ban was imposed on May 19 for two months to control the outflow of scarce foreign exchange.
The minister conceded that despite the ban, one could still find salmon and sushi in Karachi and Islamabad restaurants -- which obviously could not be four months old and meant these consignments were still coming, perhaps through the green channel that the government would soon regularise with duties.
The minister said these duties were not aimed at raising revenues but discouraging foreign exchange outflow, reported Dawn.
Responding to a question, he said there would be no restrictions on industrialists importing machinery for manufacturing products for exports, or on spare parts in small quantities, but there would still be restrictions on the machinery imported to manufacture products for the local market.
On a question about imports by the manufacturers or assemblers of automobiles, cell phones and home appliances, Ismail said the ministries of industries, commerce and the State Bank of Pakistan would, for some time, allow them to import half of what they used to do earlier, reported Dawn.
"Let me get my head above the water" before getting back to normal but "we would have to remain within our means and allow imports that could be covered with remittances and exports and no more", he said.
He said the government had also complied with power tariff adjustments and would ensure that all subsidies are funded in the budget and would also remain committed to generating Rs 153 billion primary fiscal surplus (the difference between revenues and expenditures excluding debt servicing).