Wednesday, August 31, 2022
ISLAMABAD: Finance Minister Miftah Ismail said Wednesday the federal government will consider importing goods from India as the cash-strapped nation looks for options to cushion the impact of the devastating floods.
The idea to import edible goods from India was first floated by the finance minister Monday, when the country's death toll crossed 1,100, hundreds of thousands of people were displaced, and thousands of acres of crops were destroyed.
In a statement issued on Twitter today, the finance minister said that more than one international agency has approached the government to allow them to bring food items from India through the land border.
"The govt will take the decision to allow imports or not based on supply shortage position, after consulting its coalition partners and key stakeholders," Miftah said.
Miftah's statement comes after Prime Minister Shehbaz Sharif — while speaking to international media personnel — ruled out the possibility of importing goods from India.
"The PM virtually ruled out the possibility of vegetable imports from India to overcome shortages caused by devastating floods, saying the two sides needed to talk about the human rights situation in India-held Kashmir," Daily Dawn reported.
PM Shehbaz, however, said that he was ready to have a dialogue with his Indian counterpart — Narendra Modi — over the issue.
Meanwhile, the Ministry of Commerce has decided to import onions and tomatoes from Afghanistan and Iran to control soaring prices in the country.
In response to the finance minister's proposal, PTI Senior Vice President Fawad Chaudhry said that his party will not let the flood emergency be an opportunity to open trade with India.
Taking to Twitter, Fawad said that the actions of Indian Prime Minister Narendra Modi are not only anti-Muslim but also against humanitarian values.
"Pakistan-India trade cannot take place with these actions in place. [We] strongly oppose such decisions. Loyalty with the blood of Kashmiris is a must," he wrote.
Pakistan formally downgraded its trade relations with India in August 2019 to the level of Israel with which Islamabad has no trade ties at all. The decision had come as a reaction to India’s decision to revoke Article 370 of its constitution that granted occupied Kashmir a special status.
Pakistan’s Minister for Planning Development Ahsan Iqbal told Reuters that 45% of the cotton crops had been washed away, while early wheat sowing in southern Pakistan has also been affected. Moreover, many rice fields, as well as lands where vegetables and fruits are planted, have been inundated.
Seasonal crops are critical to the economy, particularly cotton which makes up more than 60% of the country's exports, according to the data of the finance ministry.
Arif Habib Limited in its report titled ‘Floods 2022 – Inundated with Economic Woes’, states that Pakistan has recorded the worst floods since 2010, with rainfall crossing 390 mm this season. This is “three times higher than the national 30-year-average of 135 mm,” it adds.
The report further notes that the impact of the calamity is expected to last 30-45 days, while the rehabilitation process will take much longer. It also estimates around Rs1.2 trillion ($5.3 billion) in losses to the economy, which is around 1.48% of the gross domestic product (GDP).
AHL forecasts the GDP growth to shrink to 2.49% in the fiscal year 2022-23, against an earlier base case assumption of 2.97%. But a rebound is expected the following year with GDP to settle at 4.4%.
It calculated the current account deficit to grow by $1.98 billion, due to the import of food commodities and shrinking exports of textile, rice and sugar given the shortage in the country and inflation to witness further pressure this quarter, settling at 19.7% in the financial year 2023.
It also expects short-term demand to hit the cement, steel, automobile, oil marketing companies and fertilizer sectors. However, the majority of these sectors could likely benefit from the rehabilitation process.
Commenting on the possibility of importing from India, Dr Khaqan Najeeb, former Advisor Ministry of Finance, told Geo.tv that regional integration can be thought of as a "public good" and the South Asia region can benefit from it.
“Thinking about India-Pakistan, there are good economic grounds to think of the two nations moving on bilateral trade,” he said.
The former adviser further added that at this time when a big chunk of crops have suffered due to floods it may help to especially consider the import of tomatoes, onions and greens and maybe wheat later on to ensure enough supply and price stability in the country.