IN what could be termed as a strategic approach and a step in the right direction, the government has opened up barter trade with Afghanistan, Iran and Russia for certain items including petroleum, LNG, coal, wheat, pulses, minerals, metals and several food items. The Ministry of Commerce has issued an SRO in this regard stating that several rounds of meetings were held with high level delegations of various countries to make the barter trade system possible.
At present, Pakistan is faced with an unprecedented economic crisis as the IMF apparently, at least for the moment, has closed its doors to release the next tranche under the Extended Fund Facility. And the reserves position is stated to be barely enough to meet one month’s imports. In this backdrop, we understand that the government has taken a very wise decision to reduce pressure on the foreign exchange reserves and stabilize the economy. Barter trade would help overcome banking transactions because, in the case of Iran, there was no possibility of transactions through official channels because of the economic sanction imposed by the US. Pakistan could gain particularly from oil and energy imports from Russia and Iran without adding to dollar demand. Then it will also help address other major issues such as discouraging smuggling of goods from Iran, such as diesel, and Afghanistan which is hurting the economy. We believe this innovative approach will create opportunities for greater trade and economic relations, enhanced people-to-people connections and increased mutual understanding. Though this approach will not be without challenges yet we hope that these will be overcome through meticulous planning, coordination and sustained efforts. With a commitment to mutual benefit, the barter trade initiative could be a stepping stone towards a brighter, more interconnected future for Pakistan and its neighbouring countries. But at the same time, Pakistan will also have to focus on increasing its basket of valuable exports to take full benefit from this initiative. We will also suggest the government to also include other regional countries in this barter trade after negotiations with them. Then the idea of doing trade in local currencies can also be explored to reduce reliance on dollar. Though this may annoy the US, yet we have to make decisions that suit our interests.
