March 22, 2006	Wednesday	Safar 21, 1427

ISLAMABAD, March 21: Pakistan’s exports increased by 19.7 per cent to $10.6 billion during July-Feb of the current fiscal as against $8.83 billion last year, said Commerce Minister Humayun Akhtar Khan. Addressing a press conference here on Tuesday, the minister said that crossing of the $10 billion mark in eight months was a record.

He said it was expected that Pakistan would not only achieve its export target of $17 billion but was likely to exceed it, as historically exports had been proportionately higher in the last quarter (April-June) of the financial year.

Mr Khan said that encouraging performance in exports was achieved despite a decline in prices of textiles and clothing as a result of intensified price competition in the international market.

Imports for the fiscal year 2005-06 were projected at $21.8 billion, whereas actual imports during July-February 2005-06 are $18 billion, showing an increase of 46.3 per cent over the corresponding period last fiscal year ($12.3 billion).

With this increase in imports, country’s trade deficit increased to $7.432 billion in eight months of the current fiscal year as a result of government’s liberal monetary and fiscal policy initiatives, he said.

Answering a question, the minister said: “You can curtail the trade deficit by depreciating the currency and raising interest rates, but again that required strong monetary control policy.”

Mr Khan said the trade account (imports and exports) was only a part of the current account, which along with the capital account, constituted the balance of payment position. Current account includes trade account and invisibles whereas the capital account is comprised of foreign direct investment and foreign loans.

“In the wake of significant inflow of remittances and receipts under the capital account, the trade deficit is not expected to impact on the balance of payments of the country seriously. Hence, a surge in imports is not alarming. On the other hand, it is reflective of a vibrant and robust economy.”

The minister said Pakistan’s imports were inelastic because they consist mainly of machinery, raw material, petroleum products and food items whose import could not be curtailed without impacting economic growth. These imports were essential for sustaining economic activities and stabilizing food prices by augmenting supply, he added.

In reply to another query, the minister said import of vehicles under various schemes did not tax country’s foreign exchange reserves because these were financed by expatriate Pakistanis from their own earnings.

However, he said these schemes helped in reducing payments of high premiums on instant purchase of locally-manufactured vehicles. In addition, machinery brought under foreign aid also did not negatively affect country’s foreign exchange reserves.

MACHINERY GROUP: In the machinery group, major increases are electrical machinery ($100.7 million or 59 per cent), power generating machinery ($93.8 million or 45.5 per cent) and agricultural machinery and implements ($48.9 million or 198 per cent).

The increase in import of machinery shows increased investment activity, which is vital for economic growth. This will not only result in capacity enhancement for generating export surpluses but also create employment opportunities, the minister adds.

PETROLEUM GROUP: Import of petroleum group products went up from $2,127.4 million in July-January 2004-05 to $3,520.4 million in July-January 2005-06, showing an increase of $1,393 million or 65.5 per cent. This increase is due to 75pc increase in prices as compared to the corresponding period last year, though the volume of imports has declined by 5.4 per cent from 8,617,149 tons to 8,155,983 tons.

Mr Khan said that a phenomenal increase in the prices of petroleum products reflected the international trend. Petroleum products are key energy sources for transport, agriculture and industrial sectors. “The government on its part is encouraging conversion of automobiles from petrol/diesel to CNG to cut the import bill on this account.”

FOOD GROUP: Its imports also went up from $684.7 million in July-January 2004-05 to $974.2 million, showing an increase of $289.5 million or 42.3 per cent. Major increases are in sugar ($185.6 million or 9,768 per cent) and wheat ($31.9 million or 226.2 per cent).

The ECC has allowed the duty-free import of wheat and raw sugar on July 1, 2005 and refined sugar on February 8, 2005. The duty-free import of raw and refined sugar from India was also allowed on August 6, 2005. These measures were taken to alleviate the supply position in the country and stabilize the prices in the local market.

TRANSPORT GROUP: The imports of transport group items increased from $535.1 million in July-January 2004-05 to $809.7 million in July-January 2005-06, showing an increase of $274.6 million (51 per cent). The import of road motor vehicles both in CKD and CBU conditions increased from $499 million to $740.4 million ($241.4 million or 48.4 per cent). This figure also includes vehicles imported under gift, personal baggage and transfer of residence schemes and; aircraft, ships and boats from $36.1 million to $69.3 million ($31.8 million or 92 per cent).

CHEMICAL GROUP: The import of chemical group items increased by $439.5 million (23.4 per cent) from $2,048 million during July-January 2004-05 to $2,527.4 million during July-January 2005-06. Major increases in imports under this group have been witnessed in fertilizer (45 per cent) and plastic material (37.7 per cent).

METAL GROUP: The import of metal group items also increased by $451.9 million (73.2 per cent) from $617.4 million in July-January 2004-05 to $1,069.3 million during July-January 2005-06. The import of iron and steel has increased by 74 per cent and iron and steel scrap by 33.9 per cent.