Latest central bank data show that the country’s mobile phone imports have crashed by an even bigger magnitude than previously anticipated amid import restrictions. Handset imports in the Jul-Dec period of FY23 stood at a mere $87 million, compared to $926 million in the same period of the last fiscal, as per SBP data. This 90 percent year-on-year drop provided $838 million in much-needed forex savings– but considering the run on reserves these days, it has not been enough in the overall scheme of things.
Mobile phone imports have been hit harder than most other imports, with its share in overall goods imports declining from 3 percent in 1HFY22 to 0.3 percent in 1HFY23. Compared to the cellular route, the overall merchandise imports have fallen by 18 percent year-on-year to $29.5 billion in 1HFY23. More relevant, the machinery imports (barring mobile phones and telecom apparatus) have declined by 32 percent year-on-year to $2.6 billion.
As a result, the slump in handset imports accounted for 41 percent of the decline in machinery imports and 13 percent of the fall in overall goods imports in the half-yearly period under review. Back in the summer of last year when the authorities had instituted the policy of curtailment of machinery imports to 50 percent of previous levels, there were expectations that the FY22 mobile handset bill of $1.74 billion would be chastised proportionally to burn less than a billion dollars in annual imports this fiscal.
But now, considering that the monthly mobile phone imports this fiscal have averaged a number of just $15 million (compared to nearly $150 million per month average seen in FY22), those numbers won’t pick up any time soon. The import number for December 2022 was a paltry $1.5 million (compared to $171 million in December 2021). The shipment-based data from the Pakistan Bureau of Statistics (PBS), however, tells a slightly less gloomy tale for mobile phone importers.
Based on the PBS data, the handset imports totaled $363 million in the Jul-Dec period of FY23, a decline of 67 percent year-on-year (or $728 million forex saving), compared to the $1.09 billion tally in 1HFY22. This visible disparity with the SBP data (which is payments-based) corresponds with reports that goods shipments are stuck at the port, as banks are unable to clear import documents (that is, confirm the LCs) due to the forex crisis. That’s likely why the SBP’s reported number is much lower than that of the PBS.
With forex reserves at a very low level, mobile phone imports are understandably nowhere on the authorities’ priority ladder. Imports affecting basic needs (food, medicines, transport, electricity, etc.) are being prioritized to ensure that dwindling forex lasts until help arrives. If import restrictions are indeed lifted as part of an agreement to revive the stalled IMF program, the handset imports could increase, in theory. But an expensive dollar and eroding consumer purchasing power may serve to dampen demand. Let’s wait and see how cellphone import data reflect the impending macro-level adjustments in the months ahead.
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