ISLAMABAD: The government has been exploring options to further reduce imports in the upcoming 2022-23 budget with proposals under consideration to ban more luxury goods and also add more items to the list of statutory duties (RD) .

The Chairman of the Federal Board of Revenue (FBR) and his members were preparing a list of items to add to the existing number of prohibited items to compress the increase in imports. The ban would likely remain in place for a few months to meet World Trade Organization (WTO) requirements.

“The Prime Minister has instructed the Ministry of Commerce, FBR and other budget decision makers to identify items with the aim of banning and slapping RDs in an effort to reduce import bills. The number of items that will be added to the RD list or the banned list has not yet been decided,” a senior official said in an interview with The News on Monday.

The government had previously banned 38 items, but then had to issue a clarification while removing some items from the list. This task requires a lot of earthwork as it risks creating distortions in the economy, the official sources added.

The Ministry of Finance and the Planning Commission were deliberating on reducing the trade deficit in the next budget by considering setting an export target of $32 billion, with imports of around $65 billion. Imports in the outgoing fiscal year were estimated at $71 billion.

“We are trying to cut imports by $6 billion in the next budget, so we plan to cut imports to $65 billion from $71 billion,” one insightful official told The News. Budget officials expect to save $3 billion on Covid-19 vaccine imports in the next fiscal year, with an additional $2 billion in savings due to reduced shipping costs and rents.

“The government is considering measures to reduce imports by $1 billion through different tariff and non-tariff barriers,” the official said. However, the World Bank predicts that energy and commodity prices on the international market posed another risk for import-dependent countries, as average oil and food prices could continue to rise over the next six months. first months of the current fiscal year.

The government conducted a study in the recent past to consider different measures to reduce import bills as a result of the ban when it was found that the import elasticity would not allow any major reduction with the imposition tax measures. Following the findings of the study, the government eventually imposed an import ban on luxury and non-essential items.

It was deliberated that the imposition of an import ban was a short-term phenomenon because it requires WTO approval because under Article XII it is stipulated that, notwithstanding the provision of paragraph 1 of Article XI, any contracting party in order to safeguard its external financial situation and its balance of payment, could restrict the quantity or the value of the goods which can be imported.

Currently, around 600 items were listed in the SROs issued by the FBR, imposing regulatory duty in the range of 5-10% on June 30, 2021, but there were some items for which the RA was imposed in the range of from 30 to 50%.

The statutory duty on fresh or dried potatoes and citrus fruits was 25 per cent; on papayas it was 45%, apricots, cherries, peaches (including nectarines), plums and fresh sloes 35%; sour cherries, peaches, including nectarines 45 percent; sauces and preparations, mixed condiments and mixed seasonings, flour and flour of mustard and prepared mustard 50% and dog or cat food, put up for retail sale at the rate of 50%, etc. In another SRO, the FBR also imposed regulatory duties on another 700 items. Thus, currently, the FBR imposed regulatory duties on approximately 1,200 to 1,300 items.