The State Bank of Pakistan (SBP) has decided to withdraw the existing Cash Margin Requirement (CMR) on the import of items with effect from March 31, 2023.
A notification issued by the central bank’s Banking Policy & Regulations Department said that CMR instructions issued vide BPRD Circular No. 02 of 2017, BPRD Circular No. 05 of 2018, BPRD Circular Letter No. 30 of 2021, BPRD Circular Letter No. 09 of 2022, BPRD Circular Letter No. 25 of 2022 and BPRD Circular Letter No. 37 of 2022 would stand withdrawn with effect from March 31, 2023.
The withdrawal is a welcome announcement for businesses that rely heavily on imports of raw materials. The imposition of CMR slowed down imports into the country and also resulted in shutdowns in many industries due to the unavailability of adequate raw materials.
In recent months, the import restrictions have resulted in a significantly reduced current account deficit. The country’s foreign exchange reserves have also improved in recent weeks. The reserves held by the central bank which had fallen below $3 billion a few months ago have now once again crossed $4.5 billion.
Commenting on the development, the CEO of Topline Securities, Mohammad Sohail said that the relaxation was likely a pre-condition of the International Monetary Fund (IMF).