During the first 10 months of the current fiscal year, Pakistan’s trade deficit has reached $23.8 billion and has exceeded by $4.1bn. This has created more hurdles for the Pakistan Tehreek-e-Insaaf (PTI) government that wanted to revitalise the economy.
According to a report released by the Pakistan Bureau of Statistics (PBS), the imports exceeded exports by $23.8bn. The government had set the deficit target at $19.7bn. The major cause of this is the non-improvement in the exports.
In 2020, for the same period the trade deficit was higher by $3.9bn or 21.6 per cent.
Exports increased to $20.9bn in July-April FY21 compared to $18.4bn in the same period of last year, according to the national data collecting agency. There was an increase of 13.5 per cent or $2.5bn in exports in 10 months, but it was not sufficient to bridge the widening gap created by imports.
During the same period, the imports increase by 17.7 per cent to $44.7bn, higher by $6.7 billion. The target for the annual imports was set at $42.4bn, which was already exceeded by $2.3bn with two months remaining before the close of fiscal year.
“Export sector is not competitive and is still a family business that often leads to division of assets after every two generations,” said Finance Minister Shaukat Tarin. He said that there was a need to consolidate the export sector to bring foreign direct investment to the sector.
The new finance minister has his eyes set on economic growth which has been subdued during the first three years of this government. The Imran Khan led government has mostly taken stabilisation policies as it started with a current account deficit of $19bn.
A study conducted by the Pakistan Institute of Development Economics (PIDE) says the country needs to grow at a rate of 7 per cent to 9 per cent to create jobs for new entrants and reduce the unchecked public debt.
For the fiscal year 2020-21, the government had set the export target at $22.7bn. It is pertinent or mention that this government has missed the export target in its first two years.
Pakistan’s exports have been hovering around $2bn per month and the trend has not significantly changed despite excessive currency depreciation during the PTI government’s tenure.
During the Pakistan Muslim League-Nawaz (PML-N) tenure, exports had peaked at $2.3bn a month and then dropped below $2bn.
On a month-on-month basis, exports shrank 7.2 per cent to $2.2bn in April over March, according to the PBS. There was a reduction of $171million in export receipts in April 2021 compared to the preceding month, it added.