In a bid to lessen pressure on its foreign exchange reserves, Pakistan has passed a special order to allow barter trade with Afghanistan, Iran and Russia for certain goods, including petroleum and gas, according to an announcement by ministry of commerce.
Left with barely enough foreign exchange reserves to cover one month’s imports, Pakistan’s government is desperately trying to overcome a balance of payments crisis and bring inflation under control after it hit a record of nearly 38% last month.
The government order, called the Business-to-business (B2B) Barter Trade Mechanism 2023 and dated June 1, lists goods that can be bartered. State and privately owned entities would need approval to participate in the trade mechanism.
After Pakistan’s first purchase of discounted Russian oil in April, Minister of State for Petroleum Musadik Malik told Reuters that Pakistan would only be buying crude, not refined products under the deal, English newspaper Express Tribune reported.
There was no confirmation about how the payment would be made. But, Malik said purchases could rise to 100,000 barrels per day (bpd) if the first transaction went smoothly.
Last year, Pakistan imported 154,000 bpd of crude oil, little changed from 2021, data from analytics firm Kpler showed. In May, Pakistan Petroleum Dealers Association complained that up to 35% of the diesel sold in Pakistan had been smuggled from Iran.
The government has also ordered a clamp down on smuggling of flour, wheat, sugar, and fertilizer to Afghanistan.