According to Pakistan Bureau of Statistics (PBS) reported on Tuesday, Pakistan’s trade deficit experienced a height of $32.6 billion after the last fiscal year. However, imports face a historical low of $53 billion in six years.
Pakistan’s government has missed all of its trade sector targets for the fiscal year 2016-17 that was ended by June 30. This has affected official foreign currency reserves and Pakistan’s current account deficit projection. Moreover, this also sets a question on the projections made on the budget-making time every year.
According to PBS, the gap in between of imports and exports has increased to $32.3 billion during July-June period of the last fiscal year. There was also a rise of $12 billion in Pakistan’s trade deficit which was much higher than the record set by government fo the fiscal year 2016-17
What is the Government’s Take on it?
The long-term sustainability of the external sector has developed concerns after the fresh trade deficit statistics. However, the government is working to maintain by borrowing from foreign countries and commercial banks. Cheap imports have now started hurting import-substitution industries turning out in government’s policy for increased taxation.
During the previous fiscal year exports plunged by 1.63% to $20.44 billion that is a fall to a six-year low level. A total of $339 million fewer exports were seen than the receipts in the preceding year. This figure is also $4.3 billion lower than the official target of $24.8 billion.
By comparing both import bill of trade deficit has increased up to $53 billion during which are the highest digits in Pakistan’s history. This number is reflecting an increase of $8.34 billion or 18.7% on the last fiscal year.
In this case as well import bill has crossed the target set by the government by $7.8 billion it was 259% more than the exports during the same period.
The Main Reason Behind this Deficit
The main reason behind this rise is a huge decline in exports and the ballooning trade deficit that was a strong rupee against the US dollar that has made imports cheaper.
On July 5 The State Bank of Pakistan (SBP) has declared the rupee by 3.1% to Rs108.25 against the US dollar.
The uncontrolled trade deficit has worsened to unfathomable depths that were never even projected by the finance ministry. During the first eleven months of the last fiscal year, the trade deficit has reached $10.6 billion.
Now that, the government finally admits to at least having exports of one-tenth of that the total size of Pakistan’s economy to achieve a stable external sector. For this two half-hearted incentives are announced by the government for exporters in the textile sector.