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Despite economic crisis, $1.2bn worth of cars imported in just six months

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  • Pakistanis spent $1.2 billion on import of cars and other related stuff.
  • SBP reserves can only cover three weeks’ of imports. 
  • Huge spending on imports of luxuries calls for shift in govt policy. 

ISLAMABAD: Despite efforts to conserve foreign exchange reserves by restricting imports, Pakistan spent $1.2 billion (or Rs 259 billion) on the import of transportation items, including luxury cars, high-end electric vehicles, and their parts, during the last six months, reported The News.

Pakistan is facing an acute shortage of dollars and has less than $5 billion in its reserves which is hardly sufficient to finance three-week of its imports.

Despite the overall reduction in imports of transportation vehicles and other items compared with last year, the economy was still burdened with heavy outflows for buying expensive luxury vehicles and useless items.

During these six months, the country imported completely built units (CBU), completely knocked down/semi knocked down (CKD/SKD) of $530.5 million equivalent to 118.2 billion.

Since CKD kits are not allowed to be imported, yet multimillions of dollars of these kits are being imported, harming the local industry and their production.

The economy is suffering, but hefty spending on cars and other vehicle imports is raising a lot of questions about the government’s policy of halting imports related to the industrial and commercial sectors.

Road motor vehicles (build units, CKD/SKD), $1.03 billion or Rs230.5 billion were spent during these six months. Last year in the same period, the spending on these vehicles was $1.87 billion, showing a reduction of 63%.

Under the completely built units (CBU) during July-Dec 2022-23 imports of buses, trucks and other heavy vehicles imports were $75 million (Rs16.6bn), motor cars with $32.6 million.

Under the CKD/SKD, imports of buses, trucks, and other heavy vehicles imports were $722.5 million (Rs161 billion), while motor car imports were recorded at $498 million (Rs111 billion). Motorcycle imports also stood at $27.6 million.

Besides, the parts and accessories imports stood at $188.6 million (Rs42 billion). Similarly, $47.7 million were spent on the import of aircraft, ships, and boats.

Only in December, the transport sector’s imports stood at $140.7 million (Rs31.6 billion). Of this, $47.5 million or 11.3 billion rupees were spent on the imports of cars, $27 million on parts and accessories, $3.6 million on motorcycles import, $25 million on buses, trucks, and heavy vehicles, and another $22.4 million on the import of aircraft, ships, and boats.

Reportedly, despite economic crises, the incumbent government has lifted a ban on the import of luxury cars recently. This is one of the major sources of dollar outflow from the economy.

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Moody’s says the IMF programme will increase Pakistan’s foreign financing.

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Moody’s, a reputable international rating agency, has stated that Pakistan’s chances of acquiring funding will increase as a result of the recent agreement with the International Monetary Fund (IMF), which offers dependable sources for that purpose from both friendly countries and international financial institutions.

According to a recent Moody’s analysis on Pakistan’s economy, social unrest and tensions could result from Pakistan’s ongoing inflation. The country’s economic reforms may be hampered by increased taxes and potential changes to the energy tariff, it continued.

Moody’s, on the other hand, agrees that the coalition government headed by Shehbaz Sharif of the PML-N is in danger of failing to secure an election mandate, which may potentially undermine the successful and long-lasting execution of economic reforms.

The government’s capacity to proceed with economic changes may be hampered by societal unrest and poor governance, according to Moody’s.

In order to appease the IMF by fulfilling a prerequisite for authorising a rescue package, the government raised the basic tariff on electricity, which coincided with the most recent increase in fuel prices announced on Monday. This report was released by Moody’s.

Food costs have increased in the nation, where the vast majority is experiencing an unprecedented crisis due to the high cost of living, following the government’s earlier presentation of a budget that included a large increase in income tax for the salaried classes and the implementation of GST on commodities like milk.

The most recent comments were made following Islamabad’s achievement of a staff-level agreement for a $7 billion contract that spans 37 months and is contingent upon final approval by the IMF Executive Board.

It states that Pakistan will need foreign financing totaling about $21 billion in 2024–2025 and $23 billion in 2025–2026, meaning that the country’s present $9.4 billion in reserves won’t be sufficient to cover its needs.

Therefore, according to Moody’s, Pakistan is in an alarming position with regard to its external debt, and the next three to five years will be extremely difficult for the formulation and implementation of policies.

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Base Of bilateral relations: China And Pakistan Reiterate Their Support For CPEC

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China-Pakistan economic corridor is a major project of the Belt and Road Initiative, and both countries have reiterated their commitment to it. It remains a fundamental aspect of their bilateral relations.

Vice Chairman Zhao Chenxin of the National Development and Reform Commission of China and Minister Ahsan Iqbal of Planning and Development met in Beijing, where Ahsan Iqbal made this assurance.

The summit made clear how committed China and Pakistan are to advancing their strategic cooperative partnership in all weather conditions.

The focus of the discussion was on how the CPEC was going, with both parties reviewing project development and discussing how the agreement made at the leadership level will lead to the launch of an enhanced version of the CPEC.

In order to improve trade, connectivity, and socioeconomic growth in the area, they emphasised the need of CPEC projects.

The Ml-I Project, the KKH realignment, and the Sukkur-Hyderabad motorway—the last remaining segment of the Karachi-Peshawar motorway network—were all to be expedited.

Expanding the partnership’s horizons to include technology, innovation, education, connectivity, and renewable energy sources was another topic of discussion.

Specifically in the special economic zones being built under the Comprehensive Economic Cooperation (CPEX), Vice Chairman NDRC emphasised the possibility of China investing more in Pakistan.

In addition to expressing confidence in the ongoing success of the two nations’ collaboration, Zhao Chenxin reiterated China’s support for Pakistan’s development aspirations.

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Pakistani government raises petrol prices

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A recent announcement states that the price of petrol has increased by Rs 9.99 per litre, to Rs 275.60 per litre.

The cost of high-speed diesel has also increased significantly, rising by Rs 6.18 a litre. Diesel is now priced at Rs 283.63 a litre.

Furthermore, kerosene now costs Rs 0.83 more per gallon.

The cost of products and services is predicted to rise in response to the increase in petroleum prices, further taxing household budgets and jeopardizing the stability of the economy.

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