KABUL: Pakistan has reached an agreement with Afghanistan, Iran and Russia to begin barter trade for certain goods as Pakistani rupee plummets and its foreign reserves continue to fall at a rapid pace.
Pakistan’s Ministry of Commerce has issued a declaration allowing both state-owned and private enterprises to engage in goods-for-goods trade, with a specific requirement for private enterprises to be listed as active taxpayers.
Political turmoil coupled with an economic downturn and a falling currency has hit Pakistan’s cash-strapped economy hard and there are mounting pressures on its foreign reserves.
The Ministry of Commerce stated that Pakistan can export a wide range of essential goods. The declaration also highlights the opportunity for the export of surgical instruments and sports equipment.
In terms of imports under the barter system, Pakistan will acquire wheat, pulses, and petroleum products from Russia.
It will also import fertilizers and textile machinery from Russia while neighbouring countries will serve as sources for oil seeds, minerals, cotton, fruits, vegetables, spices, and dried fruits.
Pakistan could gain from oil and energy imports from Russia and Iran without adding to dollar demand. Experts believe the barter opportunity is important considering the dollar shortages the countries face.
While it may not solve currency smuggling, particularly at the Afghanistan border,
Barter trade is also expected to discourage smuggling of goods from Iran, such as diesel, and Afghanistan which is hurting the economy. It could also help curtail currency smuggling at Afghanistan border.
Pakistan’s government has also ordered a clampdown on smuggling of flour, wheat, sugar and fertilizer to Afghanistan.
The decision to allow barter trade comes as Pakistan faces an increasing challenge of winning the International Monetary Fund’s approval for a revival of a USD 6.5 billion loan package.