Posted on 28 Mar 2023
The State Bank of Pakistan (SBP) has removed all cash margin requirements (CMR) on imports of steel coils, with effect from 31 March, thereby removing a barrier to imports of these products, Kallanish notes.
The move fulfils a condition of the International Monetary Fund (IMF) before it can reach a staff-level agreement with Pakistan.
Steel coils under HS code headings 7208, 7209, 7210, 7211, 7225 and 7227 were previously included under the 100% CMR list. Imports of rails, pipes, and tubes falling under HS codes 7302, 7304, 7305, 7307 and 7308 were also subject to 100% CMR.
"We will see its [CMR removal] effects in the first week of April," says a Pakistan-based source. "Scrap imports were not subject to 100% margins ... so I don’t expect much of a change in the steel scrap markets."
"But some flat products were subject to cash margins, which will help importers of HRC if implemented," the source adds.
Cash margins are the amount of money an importer has to deposit with their bank to initiate an import transaction, such as opening a letter of credit (LC). CMR can reach up to the total value of the import.
Amid low foreign exchange reserves in Pakistan, cash margins are seen as a tool to discourage imports, as the amount to be deposited beforehand with the bank increases the opportunity cost for importers.
Source:Kallanish
