Pakistan’s trade deficit ballooned by 38.8 per cent to an all-time high $23.385 billion during the first nine months of the current financial year.
When the Pakistan Muslim League-Nawaz came to power in 2013, the country’s trade deficit was $20.435bn that has been on an upward trajectory since then owing to rising imports, while exports continue to fall and have reached the level prevailing five years ago.
Trade deficit stood at $3.208bn in March, a rise of 77.34pc compared to the same month a year ago, according to the data released by the Pakistan Bureau of Statistics on Tuesday.
If this trend continues, deficit will reach $30bn by the end of June this year, which will be the highest-ever trade deficit in the country’s history.
Commerce Minister Khurram Dastgir told Dawn that the import bill had swelled because of the largest-ever rise in power generating machinery (84.67pc), followed by office and data processing machinery (58.2pc), construction and mining (67.38pc) and agriculture machinery and implements (38.31pc).
Mr Dastgir said the nature of imports showed an increase in investment and industry. “Thus, it is a positive sign.”
He agreed that the balance of payments was a concern and said his government was trying to address the issue during this quarter.
But contrary to the government’s claims, former economic adviser Dr Ashfaq H. Khan told Dawn that this was a dangerous development on the country’s external balance of payment side. If this trend continues, he said, Pakistan’s imports would exceed $50bn for the first time in its history. He said exports were hovering around $20bn and the trade gap was expected to touch $30bn.
“What is alarming is this trend has been going on for four years and no one in the government has ever taken notice of this threatening development,” he said, adding that the finance minister should be held responsible for whatever was happening on the external balance of payment because he had taken every measure which eroded Pakistan’s export competitiveness.
The prime minister, he said, should have called an emergency cabinet meeting to review not only the balance of payment but also the entire economy.
The overall import bill rose by 18.67pc year-on-year to $38.504bn during nine months of the current financial year (July-March). In March alone, it increased by 41.22pc to $5.009bn.
In 2012-13, the import bill stood at $44.950bn.
Export proceeds during nine months of the current fiscal year declined by 3.06pc to $15.119bn. In March, however, export proceeds witnessed a growth of 3.62pc, mainly because of an increase in exports of value-added textile products.
Exports of garments and other value-added products to Europe have started picking up under the GSP+ preferential tariff scheme.
Under a three-year Strategic Trade Policy unveiled last year, the government set an annual export target of $35bn by 2018. However, the policy announced in April last year has yet to attract exporters because of its cumbersome procedures.
The government has recently removed the commerce secretary because of his failure to timely implement the trade policy.
Under the 2015-18 policy, the Ministry of Commerce notified 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. To minimise the chances of corruption, the government decided to disburse the subsidy through the State Bank of Pakistan.
“Not a single claim was received for disbursement in the last nine months,” said an official of the commerce ministry who blamed it on the cumbersome procedures involved.
Analysts say exports can only be increased by state intervention at the institutional, policy and entrepreneurial levels. The performance of the government is dismal at all levels.
The government has yet to initiate reforms in trade-related departments as policy formulation is still awaited in many areas.
The only area in which the government has intervened to gain political mileage is the award of subsides to entrepreneurs. In this regard, the prime minister announced a Rs180bn subsidy package for textile, clothing, sports, surgical, leather and carpet sectors. The package will be applicable until June 30, 2018, when the incumbent government will go into the next election.