Good news for companies, State Bank has lifted import restrictions from January 2

Good news for companies, State Bank has lifted import restrictions from January 2

Investors are asked to actively engage with all their clients, keeping in mind the liquidity situation prevailing in the forex market.
The State Bank of Pakistan (SBP) on Tuesday announced its decision to lift restrictions on imports from January 2, 2023 to provide relief to industries and businesses.

In an official circular published on the subject, “Authorized Distributors (AD) are invited vide EPD Circular No. 9 dated 20th May 2022 and Circular No. 11 dated 5th July 2022, for which advance information is required. HS Code 84 , before starting any import transaction relating to certain articles of Chapter 85 and Chapter 87, obtaining permission from the Foreign Exchange Transaction Department, SBP-BSC.
It has been decided to withdraw the said instructions with effect from January 2, 2023. Accordingly, the import processing applications already submitted to SBP-BSC in respect of the above mentioned HS codes are returned for deletion of ADs.

But the central bank said dealers can prioritize or facilitate imports for primary imports, energy imports, industrial imports for export, imports for agricultural inputs, deferred payments/self-financing imports, and imports for energy-intensive projects. Full

Primary import

Imports related to core sectors such as food (wheat, edible oil etc.) and pharmaceuticals (raw materials, essential/essential drugs, surgical instruments including stents)

Energy imports

Imports related to Petroleum Group (Oil and Gas) and Coal (Ministry of Energy for energy projects for success).

Imports by export-oriented sectors

Import of raw materials, inputs and spare parts used mainly by export oriented industries.

Imports for agricultural inputs

Import of essential agricultural inputs like seeds, fertilizers and pesticides.

Deferred payment and self-financing imports

• Import based on deferred payment, preferably from importers father/sisters, more than 365 days from the date of shipment.
• According to the existing foreign exchange legislation, foreign currency financed imports can be made through importer capital or project credit/import credit obtained from abroad.

Export oriented projects are about to be completed.

Import of plant and machinery is nearing completion for export oriented projects where at least 75% of the plant and machinery in the project has already been imported.

The central bank also directed the ADs to proactively engage all their clients to process their requests, keeping in mind the client’s risk profile and prevailing liquidity conditions in the foreign exchange market.

He advised the authorized dealers to inform all their components of the above instructions.

State Bank will bring peace to companies in 2023

Earlier this month, State Bank Governor Jameel Ahmed agreed that administrative measures on imports should not continue and should be gradually eased.

He said on his podcast that the bank could review the restrictions starting next year and bring more possibilities to the business.

The State Bank imposed restrictions on imports, which comprised about 15% of Pakistan’s total imports.

Since then, the State Bank, together with the government, has identified eight to ten business sectors that are really affected and need support. They are allowed to import 50-60% of their average monthly import payments from January to June 2022.

Similarly, some importers have reported delays where letters of credit for imports were opened before the PBS restrictions came into effect. The central bank worked with commercial banks to resolve the issue and late payments were stopped.

Besides, he added, some relaxations were achieved after consultation with the industry, resulting in less than 10 percent of the country’s imports being subject to administrative controls at present.

It is worth noting that the foreign exchange reserves held by the State Bank fell by another $584 million to a significant level of $6.12 billion, according to data released on Thursday. This is the lowest level.