AS the rupee is depreciating against the dollar on an almost daily basis due to coercive measures that the International Monetary Fund (IMF) forced the Government to take, the Federal Board of Revenue (FBR) has notified imposition of time-bound regulatory duty (RD) and additional customs duty (ACD) on almost 600 to 700 luxury items in the range of 100 to 150 percent maximum to discourage imports.
However, the Government fell short of fulfilling the commitment made publicly by Finance Minister Miftah Ismail that regressive duties of 400 to 600 percent would be levied on luxury items.
The inability of the authorities concerned to take necessary measures to safeguard financial and economic interests of the country speaks volumes about the level of our vulnerabilities and it should serve as an eye-opener to our policy-makers, political parties and other important players.
It is generally believed and rightly so that the unprecedented inflationary pressure that the country is facing for the last many months has much to do with the forced devaluation of the rupee which needs to be checked.
The positive indicators vis-à-vis flow of external resources had a salutary impact on the money market and the rupee started improving but then the State Bank mysteriously allowed exchange companies to export dollars as if the domestic market was flooded with foreign exchange.
This reversed the trend and the local currency which was hovering around Rs.210 a dollar before the decision, has now jumped to 229 rupee a dollar.
As if the decision to export dollars was not enough, Pakistan was arm-twisted to roll back the temporary ban on import of luxury items that helped check demand for dollars and now the rupee would come under greater pressure.
The imposition of regulatory duty and additional customs duty in the range of 100 to 150% is peanuts as compared to the loss that the country would suffer due to lifting of the ban on import of luxury goods because it would generate only Rs.15 billion a year while billions of loaned dollars would be squandered on questionable imports that have nothing to do with the common man.
What a pity that the lack of continuity of policies has landed us in a position where we are forced to spend costly loans on importing luxury items!
External loans for economically viable projects like those under the umbrella of China-Pakistan Economic Corridor (CPEC) are understandable as these improve our capability to pay back but the luxury of importing unnecessary items is not affordable.
It is time all stakeholders join hands to ponder over the situation and firm up a strategy that effectively safeguards our economic interests.
