Pakistan’s oil and food import bill saw a worrying rise in monthly growth in August, with August import statistics revealed by the Pakistan Bureau of Statisticsaccounting for nearly half of the country’s total imports $6.071 billion.
Oil imports have increased this year by more than 29.9% at $1.866 billion in August from $1.436 billion in July. Imports of petroleum products increased further by 28% in value and increased by 50% in quantity. Crude oil imports rose 10% in value while increasing 7% in quantity in August on a monthly basis.
Additionally, the import of Liquefied Natural Gas (LNG) whose use is becoming more common as the national SUI gas is not sufficient to cover national demand, was imported for 399 million dollars, an increase of 73%. Imports of liquefied petroleum gas jumped by 36% at $63 million in August, compared to $46 million in July.
In contrast, food group imports increased by more than 33.7% at $1,020 million in August from $763 million in July, amid growing demand for edibles. Within the food group, wheat imports amounted to $203.62 million in August, reflecting a monthly increase of 90% in value and 94% in quantity. In addition, the other main food import items were palm oil and pulses.
The PBS data showed textile and apparel exports rose 6.4% MoM to $1,575 million in August. The data showed ready-made apparel exports reached $330 million in August from $305 million in July, an increase of 8.4%, while knitwear exports reached $450 million, a monthly increase of 3.4% in August.
This increase in the import of literally everything may be the result of the government’s decision last month to lift the import ban on all products, a restriction that was imposed to control the outflow of dollars and stop the massive decline of the value of the rupee. Like the current Federal Minister of Finance of Pakistan, Miftah Ishmael said;
“As it is a requirement of the international community, we will lift the ban on all imports,” he added.
However, in order to reduce the outflow of money, he pointed out that the importation of luxury items will remain low as the government will impose regulatory duties (RD) such that these goods will not enter Pakistan as finished goods. . This decision was made by the government so that the things of the wealthy would become expensive, but the things for the use of the common citizen would remain the same.
Regardless of the tax compensation and the increase in imports, the price of oil has risen again. Due to the increase in the price of international oil, the government reduced the prices of petroleum products from July 15 to July 31. However, experts felt that this was a political decision as the government needed to increase oil tax and implement sales tax. There was also a mysterious “Fuel Price Adjustment Tax” added to the electricity bill which has never been seen in this huge amount before.
The previous PTI government kept the oil tax and sales tax at zero in order to relieve the masses. The PTI government has also provided a huge subsidy on the prices of petroleum products to bring down the rates and provide relief to the masses. However, as good as it sounds, zero-rated petrol turned out to be a bone in the throat, as Pakistan had no more money in its reserves and the country nearly defaulted. Therefore, we wanted to go to International Monetary Fund (IMF) and predictably, they also rejected our loan application because the government was not taking steps to prove that we could indemnify previous loans.
The current government in the budget, on the other hand, has already collected 855 billion rupees in petroleum tax in the financial year 2022/2023. As this fiscal year begins on July 01, 2022, it is likely that the government will choose to impose the levy from that date. The exchange rate has also seen a massive drop in the value of the rupee over the past couple of weeks despite the inflows received from the International Monetary Fund (IMF). As the price of the dollar went from Rs.218 on September 1st at Rs.236 on September 16.