14 items: Pakistan allows export settlement with Afghanistan in PKR

In a bid to ease bilateral trade with crisis-hit Afghanistan, the Ministry of Commerce has allowed export settlement of 14 items to the neighbouring country in Pakistani Rupee, informed Advisor for Commerce and Investment Abdul Razak Dawood on Friday.

“Queries have been received regarding export to Afghanistan in Pakistan Rupee. We would like to clarify that to ease exports to Afghanistan, the MoC has allowed export settlement of 14 items in Pak rupee,” said Dawood in a tweet post, while sharing the notification.

Dawood said that the items include: fish and fish products, poultry meat and products, cement, pharmaceutical, textiles, fruits, vegetables, salt, sugar, rice, and surgical instruments.

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The development comes after Business Recorder reported earlier that the government is all set to allow export of those 14 items whose major raw materials/components are imported in Pak rupees.

The Commerce Ministry, in its summary to the Prime Minister then, had stated that in order to facilitate the export of perishable goods to Afghanistan, export of fruits, vegetables, dairy products and meat are allowed against Pakistani currency on filing of regular shipping bills without the requirement of E-form under Export Policy Order.

Meanwhile, Mansoor Ahmad Khan, Ambassador of Pakistan to Afghanistan, also hailed the development.

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Samiullah Tariq, Head of Research and Development at Pak-Kuwait Investment Company, termed it a positive development as it would boost Pakistan exports. “However, its overall impact is hard to quantify, but the dollar outflow to Afghanistan may drop,” he said.

Due to the situation in Afghanistan and the absence of any formal banking infrastructure in the country, exports from Pakistan to Afghanistan have declined from $517.24 million during July-December FY 2020-21 to $328.25 million during same time period of FY 2021-22.

Crisis in Kabul

Since the Taliban takeover in August last year, foreign financial assistance has stopped, while international banks remain wary of testing UN and US sanctions, leaving the United Nations and aid groups struggling to obtain cash.

This has lead Afghanistan's economy to deteriorate, with inflation for basic household goods reaching nearly 42% in January, compared to the year-earlier period, the World Bank said. Wages and demand for labour continued to decline, as did imports, which were down 66% compared to a year earlier, it said.

Temporary waiver of EIF

In a move also meant to facilitate the neighbouring country, Pakistan also granted a temporary waiver of Electronic Import Form (EIF) for Afghanistan in order to facilitate trade activities.

The waiver, initially granted for 45 days, comes as compliance with the directions of the Prime Minister Imran Khan to assist Afghanistan in addressing the impending humanitarian and economic crisis.

As EIFs were not being issued by the corresponding banks to execute transactions for imports, this had led to a situation with long queues of cargo vehicles being stuck at Torkham and Chaman border crossings.

However, now with the introduction of the new measures, imports from Afghanistan would be possible without the mandatory requirement of Electronic Import Form (EIF) as required by the State Bank of Pakistan.