Islamabad, 3 June, 2023 (GNP): Pakistan has recently taken a step to authorize the navigation of barter trade mechanism with Russia, Iran, and Afghanistan. The groundbreaking move aims to alleviate pressure on Pakistan’s foreign exchange reserves.
In a recent report, the central bank stated a decline in foreign currency reserves to just over $4 billion, sufficient to cover only one month’s imports. An unprecedented annual inflation rate of nearly 38% has been reported for the last month.
The Ministry of Commerce has announced the implementation of the Business-to-Business Barter Trade Mechanism 2023. This mechanism will enable both state-owned and private entities to enhance barter trade with their counterparts in Russia, Iran, and Afghanistan.
Additionally, the mechanism incorporates a list of 26 commodities that Pakistan can trade off, including petroleum and gas supplies. It will further facilitate the import of crucial items such as crude oil, liquid natural gas, fertilizers, chemical products, and agricultural produce.
Pakistan decided to allow barter trade with its neighbors amid the United States sanctions on those purchasing Iranian oil. However, this mechanism offers a viable opportunity to continue trade activities and mitigate these sanctions.
In a statement, Musadik Malik, the state Minister of Petroleum emphasized that the agreement with Russia is based on the purchase of crude oil and not refined products. “We expect the first shipment of Russian oil, totaling 100,000 tons, to reach Pakistan by the end of the first week or at the beginning of the second week in June,” stated Minister Malik during a recent press briefing.
In recent developments, Pakistan and Iran jointly inaugurated the first of six border markets designed to enhance bilateral trade cooperation. However, concerns about smuggling diesel from Iran have prompted Pakistani authorities to strengthen border security measures. Pakistan has fenced the 900 KM border shared between the two countries to deter illegal transactions in either direction.
According to Kepler data analytics, Pakistan has imported a total of 154,000 bpd of crude oil compared to the last year. By leveraging these trade partnerships, Pakistan aims to stabilize its economy, ensure the availability of essential commodities, and foster mutually beneficial relations with its neighboring countries.