MUSHTAQ GHUMMAN & TAHIR AMIN
ISLAMABAD: Pakistans trade deficit widened to $20.20 billion during the first eight months (July-February 2017) of the current fiscal year, up by 34.33 percent from $15.039 billion for the same period a year before, according to Pakistan Bureau of Statistics (PBS).
Provisional trade data released by the PBS showed a decline of 3.9 percent in exports during July-February 2017 with exports contracting to $13.318 billion in the first eight months of the current fiscal year as compared to $13.859 billion for the same period of last fiscal year.
However, imports increased to $33.520 billion in July-February 2017 as compared to $28.898 billion for the same period of last fiscal year, showing an increase of 15.99 percent.
The governments Rs 180 billion incentives package announced two months ago has failed to push the countrys exports to the desired level as foreign trade figures of first eight months (July-February) 2016-17 released on Saturday showed that exports have declined by 3.9 per cent during this period.
Insiders reveal that the Commerce Ministry which pushed the Prime Minister to extend incentives is now in a dilemma as exports have continued to decline. Commerce Minister Engineer Khurram Dastgir Khan who holds monthly meetings to review export performance is reportedly disturbed at the declining trend despite implementation of the package.
According to official sources, Commerce Ministry has decided to conduct mid-term review of Strategic Trade Policy Framework (STPF) 2015-18 in consultation with all the public and private sector stakeholders. Commerce Ministry will soon write letters to all concerned stakeholders for new proposals aimed at making the STPF successful.
Trade deficit increased to $2.807 billion in February 2017, up by 87.88 percent from $1.494 billion for the same month a year ago. A significant decrease of 8.29 percent was noted in the exports in February 2017 while increase in imports was substantially higher, at 35.52 percent. Exports declined to $1.638 billion in February 2017 from $1.786 billion for the same month a year before while imports have increased to $4.737 billion from $3.455 billion a year ago.
Trade deficit in February 2017 recorded at $2.807 billion, which was 4.65 percent lower from $2.944 billion for the previous month of January 2017.
A decrease of 7.98 percent in exports and 5.91 percent in imports was recorded by the PBS in February 2017 over the previous month. Exports decreased to $1.638 billion in February 2017 over $1.780 billion in January 2017 while imports have decreased to $4.445 billion as compared to $4.724 billion.
Increase in trade deficit is not a good omen for the country and may create balance of payment problems with looming repayment of foreign debt, several analysts told Business Recorder.
The governments earnings have been declining and cannot support the balance of payment position; an increase in exports and Foreign Direct Investment (FDI) is critical to support the balance of payment and meet the financial requirements of the country, they further argued.
Imports increased dramatically due to import of machinery under the projects including power sector projects being implemented under China Pakistan Economic Corridor (CPEC).