Trade With Afghanistan | Editorial

The government has decided to allow trade of all products to Afghanistan in local currency owing to the non-availability of tradable currency through banking channels. This decision has also been taken in light of the fact that Pakistan’s exports to Afghanistan have been declining steadily since the Taliban came to power. A change in the trade regime from dollar to rupee is considered to be one of the steps to reverse the downward trend in the coming months.

According to reports, the Economic Coordination Committee (ECC) of the Cabinet has approved this change to allow trade with Afghanistan in rupees for a period of one year. Furthermore, this regime is expected to stay in place until regular banking channels are restored in Afghanistan.

It is concerning to see Pakistan becoming a net importer of Afghan goods because the country was once considered one of our top export destinations. Pakistan’s exports to Afghanistan fell by 30 percent to $717.53 million in 2021-22 from $1.018 billion in 2020-21. Since the Taliban takeover, Islamabad has offered humanitarian assistance to Kabul in a variety of ways, including waivers of duty and taxes on fresh and dried fruits, vegetables and several other products. As a result of this, the import of commodities witnessed an unprecedented increase (37 percent compared to last year) causing the trade surplus to turn into a deficit.

It has also been established that the massive imports from Afghanistan lead to dollar outflows and were causing undue pressure on the rupee. The government must look to address this imbalance considering our trade account woes. Of course, Islamabad made an exception to assist Afghanistan given the dire situation it finds itself in and that is commendable. However, in light of the economic crisis facing the country, we must look to engage with the Afghan government to seek more mutually beneficial arrangements and look to increase our export volume to Kabul.​

Source: Published in The Nation

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