KARACHI: Pakistan passed a special order to allow barter trade with Afghanistan, Iran and Russia for certain goods, including oil and natural gas, the Commerce Ministry said on Friday.
With barely enough foreign exchange reserves to cover a month’s worth of imports, Pakistan’s government is desperately trying to manage a balance of payments crisis and rein in inflation after it hit a record high of nearly 38% last month.
The government order, called the Business-to-Business (B2B) Barter Trade Facility 2023 and dated June 1, lists the goods that can be exchanged. State and private entities would need approval to participate in the trade mechanism.
Sajid Amin, deputy director of the Sustainable Development Policy Institute, said Pakistan could particularly benefit from oil and energy imports from Russia and Iran without increasing demand for dollars. He added that the barter opportunity is important considering the dollar shortages countries face.
“While it may not solve currency smuggling, particularly on the Afghan border, it may discourage the smuggling of goods from Iran, such as diesel, and Afghanistan, which is hurting the economy,” Amin added.
After Pakistan’s first discounted Russian oil purchase in April, Oil Minister Musadik Malik told Reuters Pakistan would only buy crude, not refined products, under the deal.
There was no confirmation on how the payment would be made, but Malik said the purchases could increase to 100,000 barrels per day (bpd) if the first transaction goes smoothly.
Last year, Pakistan imported 154,000 bpd of crude oil, little changed from 2021, data from analysis firm Kpler showed.
In May, the Pakistan Oil Dealers Association complained that up to 35% of the diesel sold in Pakistan had been smuggled from Iran.
The Pakistani government has also ordered a clampdown on the smuggling of flour, wheat, sugar and fertilizers into Afghanistan.
With barely enough foreign exchange reserves to cover a month’s worth of imports, Pakistan’s government is desperately trying to manage a balance of payments crisis and rein in inflation after it hit a record high of nearly 38% last month.
The government order, called the Business-to-Business (B2B) Barter Trade Facility 2023 and dated June 1, lists the goods that can be exchanged. State and private entities would need approval to participate in the trade mechanism.
Sajid Amin, deputy director of the Sustainable Development Policy Institute, said Pakistan could particularly benefit from oil and energy imports from Russia and Iran without increasing demand for dollars. He added that the barter opportunity is important considering the dollar shortages countries face.
“While it may not solve currency smuggling, particularly on the Afghan border, it may discourage the smuggling of goods from Iran, such as diesel, and Afghanistan, which is hurting the economy,” Amin added.
After Pakistan’s first discounted Russian oil purchase in April, Oil Minister Musadik Malik told Reuters Pakistan would only buy crude, not refined products, under the deal.
There was no confirmation on how the payment would be made, but Malik said the purchases could increase to 100,000 barrels per day (bpd) if the first transaction goes smoothly.
Last year, Pakistan imported 154,000 bpd of crude oil, little changed from 2021, data from analysis firm Kpler showed.
In May, the Pakistan Oil Dealers Association complained that up to 35% of the diesel sold in Pakistan had been smuggled from Iran.
The Pakistani government has also ordered a clampdown on the smuggling of flour, wheat, sugar and fertilizers into Afghanistan.