Islamabad:
Pakistan’s commercial deficit extended 29% to $ 6 billion in only two months of this fiscal year due to stagnant exports and a two -digit jump in imports, which reflects the early signs of the government’s commercial liberalization policy.
The Pakistan Statistics Office (PBS) said Tuesday that the gap between imports and exports reached $ 6 billion during the period from July to August of this fiscal year. The deficit was $ 1.4 billion, or 29%, more than the comparative period of the last fiscal year.
The highest deficit of $ 1.4 billion in just two months is also much more than the section of loans of $ 1 billion of the International Monetary Fund (IMF). Pakistan and the IMF are starting negotiations for the section in the third week of this month.
Imports during the first two months of the current fiscal year reached $ 11.1 billion, an increase of $ 1.4 billion, or 14.2%, according to the National Data Collection Agency. Imports were also twice the total value of exports during this period.
The PBS declared that exports remained stagnant at $ 5.1 billion in two months, just 0.7% more than the comparative period.
The stability of the external sector of Pakistan depends largely on the soft and highest entries of foreign remittances, since exports are not being retaken despite multiple initiatives that the successive governments announced over time. Uraan Pakistan’s economic growth plan and Stefen Dercon of the Planning Commission has not helped significantly exports.
But exporters complain that the rigidity of the exchange rate is eroding their competitiveness. The rupee has gradually appreciated after the authorities intervened again to stop the descending sliding of the local currency.
Rupee-Dollar parity closed at RS281.72 on Tuesday, which was better than a day before. But during the strong decline of the rupee about two years ago, exporters could not take advantage of the situation, and exports remained stuck at around $ 2.5 billion per month.
According to the IMF program, the Government has pledged to reduce import taxes by 52% in five years. Its first phase was implemented in July this year. The liberalization of trade is not supported by an increase in exports, which can put under pressure on the external sector.
The Ministry of Commerce and the World Bank have projected that trade liberalization would increase exports by 14% and imports only in the range of 5% to 7% in the medium and long term.
Strict control over imports until June had decreased pressure on Pakistan’s currency reserves, but if exports do not go back in the coming months, the government may have to review its commercial liberalization policy.
The PBS said that in a year after year, exports amounted to only $ 2.4 billion in August, which were $ 345 million, or 12.5%, less than the same month of the last year. Annual export contraction should be a concern for those responsible for formulating policies.
Contrary to export reduction, imports grew by 6.4% to $ 5.3 billion. It was the second consecutive month of this fiscal year when imports remained above the controlled threshold of $ 5 billion. In absolute terms, imports grew $ 319 million in a single month.
As a result, the commercial deficit also extended more than 30% to $ 2.9 billion last month. In absolute terms, there was an increase of $ 664 million in the commercial deficit. PBS data showed that about month by month, the commercial deficit was reduced to 8.8%. Exports fell 10% to $ 2.4 billion last month compared to Julio. Imports also decreased 9.4% to $ 5.3 billion. A reason for lower monthly imports was the authorization of bulk loads in July, that importers had retained in anticipation of a tax reduction.
The increase in imports is also reflected in the collection of monthly taxes by the Federal Income Board (FBR). The FBR has exceeded the two -month customs tax collection objective. Against the objective of RS192 billion, the collection of customs rights amounted to RS204 billion with a growth of 20%. The growth in the collection of customs taxes was more than the growth in the total tax compilation of RS1.66 billion for the period of two months.
