Gives an assurance to IMF in writing while seeking a $6.64 billion loan
Pakistan is likely to decide soon on extending the Most favoured Nation (MFN) status to India as the Nawaz Sharif government has given a written assurance to the International Monetary Fund (IMF) in this regard while seeking a $6.64 billion loan from it last month. What has not happened for decades might fructify soon due to the IMF conditionality imposed on Pakistan.
The government has told the IMF that it was taking steps to eliminate the negative list on trade with India and for grant of MFN status as part of its new policy to promote trade and economic ties in the region.
“The Pakistan government is expected to take a decision on this issue soon as majority of the hurdles have been removed and concerns of the stakeholders have been addressed in the last few months on various issues. This will help give a positive twist to overall sentiment and give a big boost to trade and economic ties between the two nations,” India-Pakistan Chamber of Commerce and Industry president, S. M. Muneer, told The Hindu on Saturday.
Mr. Muneer, one of the most influential and strong proponents of free trade between the two countries, said, “ It is in the interest of the people of the two nations that MFN is granted to India and overall trade sentiments takes an upturn.” One of the major concerns for Pakistan was the agriculture and textiles sectors, where it was felt that India had a commanding lead and imports from India would wipe out local industry. However, it seems those concerns have been addressed and now the opinion seems to be strongly moving in favour of giving India the MFN status and moving towards a liberal trade and visa regime.
Officials also indicated that the government is likely to take the matter to the Cabinet and then formally announce the grant of MFN status to India as a part of confidence-building measures. Officials said during the negotiations for the $6.64 billion bailout package, Pakistan had clearly given an undertaking that it would take positive steps to grant MFN status to New Delhi.
Interestingly, India had granted the MFN status to Pakistan way back in 1996.
Last year, the PPP-led government decided to switch over from a positive list of about 1,900 tradable items to a negative list of about 1,206 items, thereby allowing about 5,000 items to be traded. Pakistan’s assurance on December 31 last that it would grant MFN status by doing away with the negative list has not materialised. The bilateral trade stood at $2.35 billion in 2012-13, as against $1.93 billion in the previous fiscal.
The Memorandum of Economic and Financial Policies, which the Finance Minister submitted to the IMF on August 19, spelt out the major contours of the trade policy with the primary focus on normalisation of trade relations.