Pakistan allows barter trade with Russia, Iran and Afghanistan

Pakistan on Friday announced a barter trade agreement with Russia, Iran, and Afghanistan in an attempt to ease the mounting pressure on its already depleted foreign reserves.

According to an official notification issued by the Ministry of Commerce, the country began implementing the "Business-to-Business (B2B) Barter Trade Mechanism, 2023" on Thursday, allowing public and private entities to engage in trade with all three countries under the B2B Mechanism.

"Trade of goods under a B2B BT arrangement shall be allowed on the principle of import followed by export. The export would be made to the extent of the value of imported goods, subject to the tolerance mechanism provided hereinafter for any exigency," said the notification.

The latest development comes after Pakistan Prime Minister Shehbaz Sharif met with Iranian President Ebrahim Raisi last month.

While the South Asian country has already signed a deal to import Russian oil, and according to Minister of State for Petroleum Musadik Malik, the first ship has already docked in Oman and will arrive in Pakistan in the coming days.

According to the notification, Pakistani public and private entities are permitted to export 26 items to Russia, Iran, and Afghanistan, including milk, fruits, nuts, and vegetables, rice, confectionary and bakery items, salt, pharmaceutical products, leather, textiles, electrical equipment, and sports goods.

While 11 items, including petroleum products (including crude oil), LNG and LPG, pulses, wheat, iron, and steel, will be allowed to be imported from Russia.

Islamabad also allowed 10 items from Iran, including coal and its products, petroleum crude oil, LNG and LPG, and fruits, nuts, and vegetables.

While 10 items, including fruits and nuts, vegetables, oil seeds, minerals, and metals, can be imported from Afghanistan.

"Imports and exports under the B2B barter trade facility shall be admissible to benefits offered under various concessionary and export facilitation schemes, etc," said the ministry.

The South Asian country is grappling with political uncertainty, as well as a balance of payment crisis, severely depleted foreign reserves, and increasingly grim external financing prospects.

In terms of foreign reserves, the country has only $4.09 billion, which is barely enough to cover a month's worth of imports.