News Analysis |
With dwindling foreign reserves, the country’s economy is grossly engulfed by the imbalances in the current account. Higher imports and record-low exports of all the time, the economy is hence given another shook in the 2016-2017 fiscal year.
Finance Minister Ishaq Dar’s policy to keep stable the Rupee against the Dollar made the imports relatively cheap and exports uncompetitive in the preceding fiscal year.
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It is the fourth consecutive failure of the residing government to achieve its own targets of increasing exports as set by them in every year’s budget and fiscal plan.
The fresh statistics released by Pakistan Bureau of Statistics have shown that Government has persistently been missing out their target of expanding exports. It is the fourth consecutive failure of the residing government to achieve its own targets of increasing exports as set by them in every year’s budget and fiscal plan.
The statistics have also shown a continuous trend of comprising exports in favor of imports. The trends have shown that the trade deficit in the preceding year has been widened by 37%, which is an all-time high. With noticeably higher imports the economy has borne the loss of $32.58 billion in the last year.
The Statistics
Import bill increased to $53 billion, which is recorded highest ever in the history of Pakistan. Additionally, the figures are $8.34 billion or 18.7% higher, from the last fiscal year.
The country’s annual trade deficits, in 2013 were $20.44bn, a time when the newly elected government of PMLN took charge. But, since then there has been an annual increase in trade deficits. In the last year, the import bill increased to $53 billion, which is recorded highest ever in the history of Pakistan. Additionally, the figures are $8.34 billion or 18.7% higher, from the last fiscal year.
However, the trade deficit recorded in June showed a shrunk of 6% when compared with the figures year ago. Expect for the last three months of the preceding fiscal year, the rest showed a decline in exports with aggregate figures of trade deficit standing at Rs 10.6 billion recorded in the fist 11 months of the year.
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If described in the numerical language, on monthly basis the month of June recorded an increase of 17.5 % increase in exports, additionally raising the export bill to $1.9million higher than in the month of May of the same year. The improvements in June brought a decrease of $2.62 million in the trade deficit.
While the imports, rose by 2.16 % to $4.45bn in June, and on monthly basis, the imports contracted by 11% to $2.6 billion.
The implication of figures
The above statistics indicate that the month of June, showed a slight improvement in the trade account, but the figures are still not near to bring trade surplus.
The major reasons for this trade deficit is the heavy imports of capital goods, petroleum and food products. The immediate effect is felt in the thinning of the foreign reserves, and with already falling exports, the tight income earned from these exports are heavily directed towards paying off foreign loans.
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Keeping in view the annual figures of the sky rocked import bill of $53 billion, it is unfathomable the inability of the government to fruitfully utilize the advantages given to the Pakistani exports in the European Union regions.
Though the government claims to give an uninterrupted power supply to the export-oriented industries, the country is still far away from bringing a balance in the current account.
True is the fact that, no economy can survive without imports but despite the Prime Minister’s announcement of Rs 180 billion package for textile, clothing, sports, surgical, leather and carpet sectors. The impact of this package on the country’s exports has yet to be seen.
The Ministry of Commerce is too said to bring improvements in its three-year trade policy that was designed to uplift the exporting sector. The trade policies include 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.
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The Ministry of Commerce hailed the improvement of exports in the month of June but hasn’t given a satisfying reason for the continued increase in imports side by side.
The ministry is again driving high hopes to counter the deficits in the fresh year of 2018 with an export target set of Rs 32bn revealed in the three-year trade policy, but with the news flashing of Pakistan becoming the biggest importer of LNG by 2020, the claims are still seen as uncertain.