State Bank of Pakistan imposes 100% cash margin on imports of 131 items. In an attempt to ease the pressure on foreign exchange reserves, the State Bank of Pakistan (SBP) has imposed a 100% cash margin condition on the import of another 131 non-essential consumer items.
Before this development, the Central Bank had imposed a 100% cash margin requirement in 2017 for the import of some 404 items. Well, with the imposition of 100% LC margin, the importers have to make 100% payment at the time of Letter of Credit (LC) opening.
Now, this recent move by SBPcould possibly force importers to decrease their imports due to liquidity constraints.
Asper SBP statement, in exercise of powers vested under the State Bank of Pakistan under the Foreign Exchange Regulations Act 1947, SBP Act 1956 and other enabling laws.The decision has been taken that banks with immediate effect shall get 100% cash margin on the import of 131 listed items.
The regulatory measure would discourage the import of items including
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- Sim cards
- Motor cycles
- Old used or reconditionaccessories
- New plenumtires for motor cars
- CNG kits for vehicles
- Remote control
- Air conditioning machines
- Paper and paper board in sheet
- Whey powder
- Suspension shock-absorbers
- Auto bulbs
- Mosquito coils
- Mats and the like portable computer
- Rice in husk (paddy or rough)
- Sacks and bag of other plastics
- Sanitary towels and tampons
- Laser jet printers
- Glassware of glass-ceramics
- Vegetable oils and its fraction
- Ink jet printers
- Cinnamon and cinnamon-tree flower.
- Green tea
- Instant gas water heaters
- Diapers for infants and babies
- Large cardamoms electric telephone cables
- Footwear sole,
- Printing ink black
- Instant coffee in retail packs and many other items are included in the list of SBP.
On theother hand, according to stakeholders the decision to impose a 100% margin deposit requirement by the SBP will increase prices of such items.
It is important to mention here that Pakistan’s trade deficit reached all-time high of $37.6 billion in Fiscal Year 2017-18 (FY18). One of the culprits has been the constantly sliding Rupee vis a vis Dollar. While there has not been any improvement in the export side balance despite the anticipated devaluation effect, imports have shown no stall effect.