Pakistan on Thursday made a swift U-turn on plans to allow limited imports of sugar, cotton and wheat from India in a bid to rein in rampant inflation, a move which was thought to have signaled a further thaw in relations between the two arch-foes. The reversing of the decision came after a political backlash against the plan.
The government said late Wednesday that permits would be granted for the import of half a million tons of sugar – a move expected to slash the price of the commodity by up to 20% ahead of the forthcoming fasting month of Ramadan, when consumption soars.
Politicians Thursday criticized the apparent thaw in relations with their rival neighbor.
Pakistan’s Finance Minister Hammad Azhar said the government made the decision “in the interest of the people,” when asked why trade was resuming despite no change in New Delhi’s position on Kashmir – a divided territory claimed in full by both countries.
But on Thursday Interior Minister Sheikh Rashid Ahmed told reporters the decision had been “deferred” until New Delhi restored Indian-administered Kashmir’s special status.
The import of half a million tons of sugar would likely have slashed prices by up to 20%. Three million tons of wheat would also be allowed to be brought in, as well as unspecified quantities of cotton and yarn.
Pakistan’s economy is in the doldrums, a position made worse by a spreading third wave of the coronavirus pandemic that has seen the reintroduction of partial lockdowns across the country.
Islamabad suspended trade and diplomatic ties with India in 2019 after New Delhi revoked the special status of the part of divided Kashmir that it rules.
Both countries withdrew their top diplomats, and consular staff were expelled or withdrawn.
There has been a frosty standoff since, but signs of rapprochement recently have included Indian Prime Minister Narendra Modi and his Pakistani counterpart Imran Khan exchanging letters, as well as a resumption of talks last week on the use of resources from their shared Indus River.
Bloomberg reported last week that the United Arab Emirates (UAE) had brokered secret back-channel talks between the two South Asian nations.
“Cutting trade ties with India was an emotional decision and now the resumption of these ties is an economic compulsion,” Farrukh Saleem, an economist and financial and political analyst, told Agence France-Presse (AFP).
Azhar only took up his position on Tuesday after Khan sacked his predecessor for failing to check runaway inflation.
Meanwhile, the International Monetary Fund resumed its $6 billion bailout program with Pakistan, which was paused after the COVID-19 outbreak, sending an installment of nearly $500 million this week.
Pakistan went on to make its first foray in nearly five years into the global treasury market, with an oversubscribed issue of $2.5 billion in eurobonds.
The country is in debt to the tune of nearly $114 billion – more than 85% of its gross domestic product.
#Daily Sabah #Pakistan News