ISLAMABAD, June 10: Pakistan’s trade deficit widened 93.05pc in 11 months (July-May) of the 2005-06 to its highest level as oil prices hit a new high and imports of petroleum and capital goods also set a record, the government said on Saturday.
The July-May trade gap totalled $10.636 billion as against the $5.509 billion recorded the same period last year. Economists had estimated an annual trade deficit of $4.16 billion.
Official figures released here by FBS showed that import bill reached to record $25.598 billion during the period under review as against $18.368 billion the same period last year, an increase of 39.36pc.
While exports increased by 16.35pc to $14.961bn during the period as against $12.858 billion over the same period last year.
It was likely that by the end of the fiscal year, the trade deficit would hit the $11 billion, a record during the last two decades.
The 93pc increase in the trade deficit is going to have serious implications for Pakistan’s balance of payments particularly on its current account and on the health of the rupee.
The rupee remained stable during the last 10 months of the current fiscal year ranging between Rs59.6266 per dollar in July 2005 to Rs60.0218 in April 2006.
Analysts said the rupee would have lost far more value against the greenback had the State Bank not intervened in the market and stabilise the local currency. But as the trade deficit continued to rise and the foreign exchange reserves of the central bank had also come down, the rupee looked set to shed some value before the close of the fiscal year.
In 10 months of this fiscal year, Pakistan saw $4.08bn current account deficit against $0.935 billion during the same period last year, an increase of 336.3pc.
The data showed that the main reason behind the huge increase in the current account deficit was the widening trade deficit mainly because of higher oil bills and increasing machinery import.
The workers’ remittances, the second largest source of foreign exchange inflows after exports, totalled $3.629 billion during the 10 months of the current fiscal as against $3.451 billion over the same period last year, depicting a marginal increase of 5.2pc.
The trade deficit has been on the rise so steadily since the start of this fiscal year that remittances from overseas Pakistanis that once used to offset the trade deficit retreated from this role.
The total remittances during this fiscal year are likely to reach $5bn only, against an estimated trade deficit of more than $11 billion; the remittances would cover only the nominal part of deficit.
Efforts to privatise state-run enterprises also were aimed not only at making them more efficient but to get extra foreign exchange to fill in the holes in the balance of payments.
Foreign exchange received through privatisation of state-run entities forms part of foreign direct investment. The foreign direct investment increased by over 238pc, attracting $3.1bn during the 10 months of the current fiscal against $891.5m during the same period last year.
