Pakistan will import 2 million metric tons of wheat from Russia for cash payment as part of Western sanctions imposed on Russia after its invasion of Ukraine, according to local reports on May 28.
Pakistan’s Ministry of Finance has stated that “the ECC [Economic Coordination Committee] authorized the import of two million metric tons of wheat on a government-to-government basis” from Russia, reported The Tribune Express.
The ECC has also authorized the import of another million metric tons of wheat through an international bidding process under the existing arrangement. Customs duties on edible oil imports will be temporarily lifted to expedite shipments in June.
The ministry said Pakistan needs to find a way to make payments for Russian imports, as Russian banks have been blocked from the SWIFT international payment network. The national ministry of food security had suggested exploring barter trade with Russia.
Pakistan has gone from being a wheat exporter to a wheat importer. The ministry said Pakistan’s wheat production fell to 26.4 million metric tonnes, below forecast consumption of 30.4 million tonnes.
The country’s wheat shortage has been exacerbated by rising world prices caused by the Russian-Ukrainian war.
“There is a shortage of food grains in Pakistan. And there is also a decision to import a certain amount of wheat using various options, international tenders and [government-to-government] options,” the Foreign Ministry spokesman told reporters on May 27.
“In this regard, the government is in contact with friends and partners, and we are also consulting with the Russian side on this,” the spokesperson added.
The ministry also noted that Pakistan has an “open door policy”, implying that the government will seek “options and avenues” when there is a “national interest”.
The government also raised fuel prices by 30 rupees ($0.15) a liter on May 27 to meet the International Monetary Fund’s condition to revive the $6 billion bailout package for Pakistan.
Petrol now costs 179.86 rupees per liter ($0.90), diesel costs 174.15 rupees ($0.88), kerosene costs 155.56 rupees ($0.78) and light diesel costs 148.31 rupees ($0.75).
The ECC granted 62.3 billion rupees ($311 million) for the payment of fuel subsidies. It also approved 50 billion rupees ($251 million) to reduce power cuts and 36 billion rupees ($181 million) to provide grants to needy households and pay for subsidized basic commodities.
The country is threatened with economic default in a context of political uncertainty. Finance Minister Miftah Ismail said on May 29 that Pakistan needed $36 billion to $37 billion in the next financial year and had to pay about $21 billion in foreign debt due next year.