KARACHI: Pakistan’s trade deficit has ballooned to $30 billion, for the first time in the history of the country, as the exports declined and imports increased.
The trade deficit, gap between exports and imports, increased by 42.12 percent and reached $30 billion during July-May period of FY2016-17 from $21.11 billion of the corresponding period of the last year. It was highest ever trade imbalance during eleven months of a financial year.
The government has failed to find a solution for the ever-increasing gap between imports and exports, hence the dangerously high trade deficit.
Provisional trade data released by the PBS on Monday showed a decline of 3.13 per cent in exports during July-May 2017 while 20.60 percent increase in imports. Exports have declined to $ 18.541 billion from $ 19.140 billion for the same period of last fiscal year while imports have increased to $ 48.539 billion in the current fiscal year from $40.247 billion for the same period of the last fiscal year.
The gap in imports and exports has broken all previous records for the past three months reaching the ominous $30 billion mark. It should be noted that the Ministry of Finance set an annual target of $20.5 billion for the current fiscal year.
According to the reports, imports increased to $ 5.092 billion in May 2017, which are higher by 27.88 per cent from $ 3.982 billion for the same month of the last fiscal year and exports dipped to $ 1.627 billion from $ 1.827 billion for the same month a year before.
Trade deficit in May 2017 was $ 3.465 billion over previous month of April 2017, which is higher by 8.52 per cent over previous month. According to PBS, exports declined by 9.88 per cent in May 2017 over the previous month while imports have increased by 1.88 per cent.
The country”s import stood at $ 5.092 billion in May 2017 and exports at $1.627 billion while for the same period of last fiscal year exports were $ 1.805 billion and imports were $ 4.998 billion leading to a trade deficit of $3.193 billion.
The new statistics have increased concerns over the long-term sustainability of the external sector which is currently maintained by the government through loans from foreign countries and international banks.
The balance of payments for Pakistan are now projected to reach worse levels and the finance ministry has been forced to revise its current account deficit projection to $8.4 billion for the outgoing fiscal year.
It will be the fourth consecutive year that the PML-N led government will miss its annual exports target even though Pakistan enjoys duty-free status for its exports in the European Union. Partially funded incentive packages have only caused resentment among exporters and have not helped pickup exports. Exporters have yet to submit claims for the subsidy due to “flaws in the schemes”.
Under the Strategic Trade Policy 2015-18, the Ministry of Commerce notified five cash support schemes to improve product design, encourage innovation, facilitate branding and certification, upgrade technology for new machinery and plants, provide cash support for plant and machinery for agro-processing and give duty drawbacks on local taxes.