ISLAMABAD: Pakistan will allow limited imports of sugar, cotton, and wheat from India in a bid to rein in rampant inflation, signalling a further thaw in relations between the two arch-foes.
The government said late Wednesday that permits would be granted for the import of half a million tons of sugar — a move expected to slash the price of the commodity by up to 20 percent ahead of the forthcoming fasting month of Ramadan, when consumption soars.
Three million tons of wheat would also be allowed to be brought in, as well as unspecified quantities of cotton and yarn.
Pakistan’s economy is in the doldrums, a position made worse by a spreading third wave of the coronavirus pandemic that has seen the reintroduction of partial lockdowns across the country.
Islamabad suspended trade and diplomatic ties with India in 2019 after New Delhi revoked the special status of the part of divided Kashmir that it rules.
Both countries withdrew their top diplomats, and consular staff were expelled or withdrawn.
There has been a frosty stand-off since, but signs of rapprochement recently have included Indian Prime Minister Narendra Modi and his Pakistani counterpart Imran Khan exchanging letters, as well as a resumption of talks last week on the use of resources from their shared Indus River.
Bloomberg reported last week that the United Arab Emirates had brokered secret back-channel talks between the two South Asian nations.
Asked at a press conference Wednesday why the trade was resuming despite there being no change in New Delhi’s position on Kashmir, Pakistan Finance Minister Hammad Azhar said the government had to make decisions “in the interest of the people”.
“Cutting trade ties with India was an emotional decision and now the resumption of these ties is an economic compulsion,” Farrukh Saleem, an economist and financial and political analyst, told AFP.
Azhar only took up his position on Tuesday after Khan sacked his predecessor for failing to check runaway inflation.
Meanwhile, the International Monetary Fund resumed its $6 billion bailout programme with Pakistan, which was paused after the coronavirus outbreak, sending an instalment of nearly $500 million this week.
Pakistan went on to make its first foray in nearly five years into the global treasury market, with an oversubscribed issue of $2.5 billion in Eurobonds.
The country is in debt to the tune of nearly $114 billion — more than 85 percent of its gross domestic product.