Renowned economist Dr Ashfaque Hasan Khan, Dean at NUST School of Social Sciences, urged the government to adopt an aggressive import compression policy as the country faces a shortage of dollars.
He said that while the economy is not in bad shape, “the challenge we have is rising imports as we are running out of dollars... We are importing luxury items for the elite including branded cars and top of the line food items. If these things do not come to Pakistan, would the country suffer?” he asked.
Talking to a private channel, he said the government needs to take measures to cut non-essential imports. “I would urge the incumbent government to adopt an aggressive yet selective import compression policy."
The expert added that the country would witness record exports and remittances this year at $30 billion and $30-31 billion respectively. “However, what is wrong is that this year will be the biggest import in the history of Pakistan, which is our sore point,” he said.
According to the PBS monthly summary on foreign trade statistics for April 2022, the country’s imports increased by 46.41% during the first 10 months (July-April) of the current fiscal year and stood at $65.492 billion compared to $44.731 billion during the same period of the corresponding year.
Amid a rise in the import bill, Pakistan’s trade deficit widened by 64.79% during the first 10 months of the current fiscal year and reached $39.264 billion compared to $23.826 billion during the same period last fiscal.
The widening of import bill has added pressure on the country’s foreign exchange reserves, which have recorded significant decline in recent months. As per latest figures, the SBP’s reserves recorded a decline of $59 million to $10.499 billion, due to external debt payments, down from $10.558 billion recorded in previous week.
Meanwhile, commenting on the Federation of Pakistan Chambers of Commerce and Industry's (FPCCI) call for a declaration of a state of economic emergency to moderate the impact of the current economic turmoil, the economic expert said that last year, Pakistan's economy grew by 5.7%, and this year it is expected to grow by about 5%.
“What is wrong with this, as there are many countries in the world growing at a much slower pace,” he said.
Sharing other economic indicators, Ashfaque said that Pakistan's industries have witnessed a growth of 8% during July-February, “far higher than the target.” Meanwhile, 5.5 million jobs have been created, while Pakistan’s response to the COVID-19 pandemic was internationally recognised, he said.
Earlier, in a letter to the Prime Minister, the FPCCI President Irfan Iqbal Sheikh expressed deep concern about ongoing economic turmoil amid continuously depleting foreign reserves and tremendous inflationary pressure.
The FPCCI president said that the government borrowing stood at around 63.6% of the total outstanding loans in March 2022. Higher policy rates erode the fiscal capacity of the government as the cost of debt increases. FPCCI recommended reducing policy rates from 12.25% to 7.0% which would allow curtailing debt servicing of short-term loans by at least Rs300 billion.