August 11, 2006	Friday	Rajab 15, 1427

ISLAMABAD, Aug 10: Pakistan's trade deficit widened by 70.58 per cent to $1.239 billion during the first month of the fiscal year 2006-07 as against $726.936 million in the same month last year, as oil prices hit a new height in the international market.

According to official provisional figures here on Thursday, the import bill reached a record $2.460 billion in July 2006 as against $1.996 billion in the same month last year, showing an increase of 23.25 per cent.

Exports declined by 3.85 per cent to $1.220 billion in July 2006 as against $1.269 billion in the same month last year.

The government projected a trade deficit at $9.4 billion for the fiscal year 2006-07. The export target was projected at $18.6 billion while the import target at $28 billion for 2006-07.

Keeping in view the rising oil prices in the international market coupled with massive imports of consumer and capital goods, it was unlikely that the government could maintain the trade deficit target, analysts said. “The huge trade deficit will put immense pressure on current account deficit as well as on the value of the rupee.”

The current account is financed by selling local units through privatisation, foreign direct investments and remittances sent by overseas Pakistanis.

“There will be a serious challenge for the government during the current fiscal year, as there are least chances for further major privatisation of state-owned entities to bridge the gap, while foreign direct investment in the telecommunication sector had already reached its situation point,” the analysts added.