Pakistan Permits Barter Trade with Iran, Afghanistan, and Russia.

Pakistan has agreed to trade certain goods, like oil and gas, with Iran, Afghanistan, and Russia in return for other goods. This is to get around the bans that the West has put on those countries and relieve pressure on Pakistan’s dwindling foreign exchange reserves.

Pakistan opts for barter trade with Afghanistan, Iran, Russia

The Ministry of Commerce said Friday that its order, the Business-to-Business Barter Trade Mechanism 2023, “shall go into effect right away.”

Pakistan, which has about 230 million people, is struggling to deal with a balance of payments problem and stop inflation from rising.

This week, the country’s central bank said that its foreign currency reserves had dropped to just over $4 billion, which is barely enough to pay for imports for one month. Last month, the yearly rate of inflation was nearly 38%, which was the highest it has ever been.

The barter trade system has a list of 26 goods that the Pakistani government and private businesses can sell in Afghanistan, Iran, and Russia. In return, they can buy from the three countries crude oil, liquid natural gas, liquid propane gas, chemical products, fertilisers, fruits, wheat, industrial machines, and veggies.

After Pakistan bought its first cheap oil from Russia in April, Minister of State for Petroleum Musadik Malik told Reuters that under the deal, Pakistan would only buy crude oil and not finished goods.

No information was given about how the money would be paid. But Malik said that if the first deal went well, the amount bought could go up to 100,000 barrels per day (bpd).

Pakistan brought in 154,000 bpd of crude oil last year, which is about the same as in 2021, according to figures from the analytics company Kpler. In May, the Pakistan Petroleum Dealers Association said that up to 35% of the diesel sold in Pakistan was illegally brought in from Iran.

The government has also said that flour, wheat, sugar, and fertiliser can’t be smuggled into Afghanistan.

Since the Taliban took over the landlocked neighbouring country in August 2021, trade between the two countries, especially the sale of Afghan coal, has grown by a lot. Most of the trade between the two countries is done with cash, but some things are also traded.

The return of conservative de facto Afghan authorities to power caused Western countries to stop all economic aid to the mostly aid-dependent country and put banking sector bans in place. This made it impossible for Afghanistan to trade regularly with other countries.

 

 

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