Pakistan's new government on Thursday said it would ban the import of over 30 luxury items including cars and fruit jams in an austerity move to help boost the country's faltering economy.

Cash-strapped Pakistan has been hit by a storm of crippling debt, dwindling foreign currency reserves and galloping inflation.

The national currency hit a historic low on Thursday, with 200 rupees fetching $1.

"My decision to ban (the) import of luxury items will save the country precious foreign exchange," Prime Minister Shehbaz Sharif tweeted.

The move was an effort to target the country's elite, with the banned goods including mobile phones and cars -- which make up the largest share of import bills on the list -- as well as cosmetics and jams.

"We will be able to save $6 billion by imposing a ban on import of the luxury items," information minister Marriyum Aurangzeb said at a press conference, adding that the ban would be effective immediately.

"The decision will give a boost to the local economy and industry".

However, business leaders said the country must seek consent from the World Trade Organization, which regulates international trade.

Pakistan's rupee has hit a historic low and the government is imposing an import ban on 30 luxury items in an austerity move to boost the economy
Pakistan's rupee has hit a historic low and the government is imposing an import ban on 30 luxury items in an austerity move to boost the economy AFP / Asif HASSAN

"I think it is a prudent step by the government... it would help save much needed foreign exchange to pay off our international trade debts," said Khalid Tawab, the former senior vice president of the Pakistan Chamber of Commerce.

"The government has not declared a financial emergency yet, but that is the situation we are facing, and so under such circumstances the WTO could be persuaded to relax its rules."

Pakistan's current trade deficit stands at $39.2 billion.

Former leader Imran Khan was ousted in a no-confidence vote last month, largely as a result of failing to reverse the soaring cost of living and prices of basic goods.

The announcement comes as Pakistan officials are locked in negotiation with the IMF in the Qatari capital Doha over the release of funds as part of an agreed loan programme.

A six billion dollar IMF bailout package signed by former prime minister Imran Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve revenue and tax collection.

Islamabad has so far received $3 billion, with the programme due to end later this year.

Officials are seeking an extension to the programme through to June 2023, as well as the release of the next tranche of $1 billion.

A major sticking point is likely to be over costly subsidies -- notably for fuel and electricity -- and Finance Minister Miftah Ismail said he wants the two sides to "find a middle ground".