ISLAMABAD: Pakistan’s increasing gold exports are likely to take a hit due to a ban on the import and export of precious metals introduced amid last week’s military standoff with India, analysts said on Wednesday.

On May 6, the government enforced a 60-day ban on the import and export of precious metals, jewelry and gemstones to stabilize its foreign exchange reserves, just one day before India attacked Pakistan.

The deadly escalation followed an attack in Indian-administered Kashmir on April 22 that killed 26 tourists, which New Delhi blamed on Pakistan despite Islamabad’s denial of any involvement.

Nearly two weeks after the incident, the nuclear-armed neighbors exchanged ballistic missiles and artillery fire after India targeted what it called “terrorist infrastructure” inside Pakistan.

Gold remains a traditional store of value in the country, which primarily sources its imports of the metal from the United Arab Emirates, Switzerland, Turkiye and other major gold-trading global centers.

“This ban is expected to be lifted,” Ahsan Mehanti, the Chief Executive Officer at Arif Habib Commodities Ltd, told Arab News. “However, it is negatively impacting the country’s gold exports that were increasing to a record level.”

According to the Pakistan Bureau of Statistics, the country’s jewelry exports rose by 58 percent to Rs3 billion ($11 million) in March this year, matching the total for the entire previous year.

“This 58 percent surge is a record,” Mehanti said, adding the ban will have a short-term impact on gold exports this year, which are bound to increase later when the ban is lifted in July.

“The ban was imposed when the [Pakistan-India] border tensions started intensifying,” he continued. “This military escalation could have led to an increase in the circulation and prices of gold in Pakistan, but no such thing happened because of the government’s ban.”

He maintained the ban helped the gold market avoid speculative trading that kept the prices in check.

Mehanti said since international gold prices have declined on the back of the US-China trade war’s settlement, “we expect the surge [in Pakistan’s gold exports] to be higher than the previous record surge of 58 percent.”

Pakistan’s Dawn newspaper reported on May 8 the export curb aimed to limit the flow of gold and other precious metals to India via Dubai, citing unnamed government officials.

It added the ban was also intended to restrict the outflow of dollars from the cash-strapped country, which has spent over $28 million on importing 368 kilograms of gold so far this year.

However, the commerce ministry spokesperson, Muhammad Ashraf, denied the ban had any “relevance to the Pak-India conflict.”

A member of the managing board of Karachi Sarafa & Jewellers Group, M. Iqbal, said Pakistan’s gold market was linked to the international gold market, which is mainly driven by the dollar.

“Gold would take a hit when the United States faces an issue like what we saw during the US-China tariffs war,” he explained.

The cash-strapped country also exported $4.1 million worth of gems in the first nine months of FY25 ending in June.

Prime Minister Shehbaz Sharif’s administration is relying mainly on the International Monetary Fund’s (IMF) $7 billion loan program to keep debt-ridden Pakistan’s balance of payments in check, as exports have grown only six percent this year while foreign direct investment has remained stagnant for decades.

The government has incentivized jewelry exporters through duty drawbacks and zero-rating for specific inputs, which helped the country’s jewelry exports rise 43 percent last year.

Gold prices in Pakistan hit a record high late last month but have been declining since the US and China resolved their trade tariff dispute. 

On Tuesday, 12 grams of the yellow metal were priced at $1,222 (Rs344,200).

In 2023, Pakistan relaxed several gold import regulations to promote transparency, minimize smuggling and establish computerized customs valuation and tracking systems.
 

KARACHI: Pakistan has received the second tranche of special drawing rights worth 760 million ($1,023 million) from the International Monetary Fund under an extended fund facility (EFF) program, the State Bank of Pakistan said on Wednesday, bringing disbursements to $2 billion within a $7 billion bailout program. 

The IMF last Friday approved a fresh $1.4 billion loan to Pakistan under its climate resilience fund and approved the first review of its $7 billion program, freeing about $1 billion in cash. 

“SBP has received the second tranche of SDR 760 million ($ 1,023 million) from the IMF under the EFF program,” the central bank said on X. 

“The amount will be reflected in SBP’s foreign exchange reserves for the week ending on 16th May 2025.”

In a statement released on Friday, the IMF said Pakistan’s policy efforts under the program had “already delivered significant progress in stabilizing the economy and rebuilding confidence, amidst a challenging global environment.” 

“Moving forward, policy priorities will include advancing reforms to strengthen competition, raise productivity and competitiveness, reform SOEs, improve public service provision and energy sector viability, and build climate resilience.”

The IMF also approved a request for an arrangement under the Resilience and Sustainability Facility (RSF), which will support Pakistan’s efforts in building economic resilience to climate vulnerabilities and natural disasters, with access of around $1.4 billion.

“The RSF funds will be released gradually over the next 28 months,” the government’s finance adviser Khurram Schehzad told Arab News, declining to specify when the first tranche would be received. 

Pakistan’s 37-month EFF, approved on Sept. 25, 2024, aims to build resilience and enable sustainable growth. Key priorities include entrenching macroeconomic sustainability through implementation of sound macro policies, including rebuilding international reserve buffers and broadening of the tax base; advancing reforms to strengthen competition and raise productivity and competitiveness; reforming state-owned enterprises and improving public service provision and energy sector viability; and building climate resilience.

Highlighting progress in stabilizing the economy, the IMF said Pakistan’s fiscal performance had been strong, with a primary surplus of 2.0 percent of GDP achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1 percent of GDP. 

“Inflation fell to a historic low of 0.3 percent in April, and progress on disinflation and steadier domestic and external conditions, have allowed the State Bank of Pakistan to cut the policy rate by a total of 1100 bps since June 2025,” the IMF added.

“Gross reserves stood at $10.3 billion at end-April, up from $9.4 billion in August 2024, and are projected to reach $13.9 billion by end-June 2025 and continue to be rebuilt over the medium term.”