LAHORE – Business community has welcomed the government decision of allowing barter trade with Russia, Iran and Afghanistan.
Lahore Chamber of Commerce and Industry has appreciated State Bank of Pakistan (SBP) and the Ministry of Commerce for issuing two significant circulars that would promote regional trade and ease burden on depleting foreign exchange reserves.
The government has implemented a barter trade mechanism with Afghanistan, Iran, and Russia that permits state-owned and private sector enterprises to engage in the import and export of goods, including petroleum and natural gas.
LCCI president Kashif Anwar and other office-bearers expressed hope that import of oil and energy from Russia would help reducing the cost of petroleum products and strengthen energy security.
Under the barter trade arrangement, the principle of “import followed by export” will be followed, ensuring that exports match the value of imported goods. This innovative trade approach opens up opportunities for Pakistani businesses to export 26 identified goods, including milk, eggs, cereal, meat and fish products, fruits and vegetables, rice, salt, pharmaceutical products, leather apparel, footwear, steel, and sports goods to Afghanistan, Iran, and Russia. Simultaneously, Pakistan can import a range of products, including fruits, vegetables, spices, minerals, coal, rubber items, cotton, pulses, wheat, petroleum oils, fertilizers, plastic and rubber articles, metals, chemicals, and textile machinery from these countries.
LCCI officer bearers said that implementation of this barter trade mechanism would significantly reduce the cost of doing business and stabilize Pakistan’s economy. It will ease burden on foreign reserves, address the country’s balance of payments crisis, reduce the reliance on dollar transactions, and bring much-needed relief to businesses, thereby enhancing the overall business environment.
The SBP has granted banks permission to acquire US dollars from the interbank market. This short-term measure aims to alleviate pressure on exchange companies and enable customers to benefit from lower exchange rates. The permission granted to banks will remain valid until July 31.
Previously, customers conducting card-based cross-border transactions were subjected to the open-market USD rate, resulting in a considerable disparity between the interbank and open-market rates. By allowing banks to purchase dollars from the interbank market, this circular has effectively reduced the open-market dollar rate by Rs20-25. This step will not only reduce the cost of cross-border transactions but will also narrow the gap between the interbank and open-market rates.
