The trade deficit as per the SBP is not widening as fast as it is in reality. We spoke about this issue in an earlier: SBP import figures are underestimated as the bank is underreporting its imports, particular those of power generation, and the difference can be ascertained from trade numbers reported by the Pakistan Bureau of Statistics (PBS).
The reason for the discrepancy is that the two have different sources of data. Whereas PBS gets its data directly from customs when goods cross the border, SBP takes the data from commercial banks when payments are made through the letter of credit (L/C) for imports.
This is why much of the CPEC related imports have not started to reflect in SBP figures thereby reported a subdued trade and current deficit. These imports are being recorded by the customs department but SBP does not have the import financing data available with it from banks. The SBP identified this to be possibly because majority of the power generation imports are “financed outside the Pakistani banking channel”.
Even though in its quarterly report, the SBP said it is seeking remedial actions from commercial banks and government channels to better report such transactions, the gap between SBP and PBS data in imports has only widened—the difference having grown from Rs3.5 billion to Rs5.6 billion in 10MY17.
The share in machinery in total imports according to PBS is 23 percent while the same is only 16 percent for data reported SBP. That is a huge discrepancy, one that needs immediate rectification. It is crucial that these numbers start to reflect in official Central Bank figures, especially since these are CPEC related transactions that need ongoing analysis on their nature and their impact on the external accounts.
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