The State Bank of Pakistan (SBP) imposed on 30 September a 100 per cent cash margin requirement on import letters of credit (L/Cs) for an additional 114 items.

This brings the total number of items subject to a 100 per cent cash margin to 525 and is one of several measures introduced by the SBP to discourage certain imports with the aim of bolstering Pakistan's balance of payments.

Extended list

Vegetable oils, spices, car parts, ceramics and household appliances are included in the list of items most recently added to those subject to the 100 per cent cash margin on import L/Cs.

The SBP first introduced cash margin requirements on a list of 404 items to dissuade importers from buying foreign non-essential and consumer goods in 2017 before adding more items to the list the following year.

Supporting balance of payments

To ease the economic shock of the coronavirus pandemic the bank reduced the number of items on the list. Now the economy is recovering, the SPB is introducing measures to keep the current account deficit at sustainable levels.

As well as broadening the scope of the cash margin on L/C imports, the SBP earlier in September introduced new restrictions on consumer credit for imported vehicles, including a blanket ban on bank financing for new as well as used cars supplied from outside Pakistan.

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