Trade imbalance figures vary by 35pc: State Bank, FBS data
By Sabihuddin Ghausi
KARACHI, Aug 25: A difference of almost 35 per cent in calculation of Pakistan’s trade imbalance by the Federal Bureau of Statistics and the central bank for the year 2005-06 has created doubts about the credibility of official figures related to trade, inflation, employment and poverty.
The State Bank of Pakistan (SBP) has put 2005-06 trade imbalances at $8.44 billion after calculating exports at $16.50 billion and imports at $24.94 billion. The FBS has given trade imbalance at $12.11 billion as exports are shown at $16.45 billion and imports at $28.58 billion.
An imbalance of $12.84 billion has been shown in imports of goods and services amounting to $33.09 billion as against export of goods and services worth $20.25 billion.
Bankers say that as a matter of practice the SBP trade figures are always less than those of the FBS. It is because the bank relies on actual realization of export proceeds and remission of import proceeds to the sourcing country’s bank. The FBS depends on the figures of trade documents lodged with the customs. Since it takes time in actual remission of cash from Pakistan to a foreign country or inflow of export proceeds from foreign banks into Pakistan after the registration of trade documents with customs, the State Bank trade figures remain on the lower side.
“But it cannot be so low as to show a difference of 35 per cent,” a banker explained as he put the normal difference between the SBP trade figures with those of customs at five to 10 per cent.
Participating in a discussion on a private TV channel programme broadcast on late Thursday’s night State Bank Governor Dr Shamshad Akhtar disclosed that a team of central bank officials were studying the issue of big difference in trade imbalance figures.
Efforts made to find out details of the exercise by SBP on Friday proved futile as none of the officials could give any explanation. Chairman Export Promotion Bureau Mr Tariq Ikram was not surprised on this wide difference as according to him the central bank might have counted the export proceeds in 2005-06 that may have come from documents lodged in 2004-05.
But then he admitted a lot of confusion in the FBS trade figures. “I got detailed export figures up to April 2006 only a few days ago,” the EPB chairman said.
He pointed out that he had complained to the federal secretary of Statistics of the difficulties the bureau was facing in carrying out analysis of export trade and draw up an appropriate strategy for future.
The market analysts, independent economists, researchers and consultants have not minced words to express doubt on the findings of the official inflation indices, poverty surveys, labour force survey and all market related exercises.
The senior government functionaries have on many occasions also ridiculed the FBS data and in fact suppressed the 2001-02 household income expenditure survey on the plea that its sampling was bad.
Recently, the government, on the basis of a survey, claimed of bringing poverty ratio to about 10 per cent in two years and has generated 5.8 million new jobs that have brought down employment ratio in the country. But the government refused to share the survey data and related information with the reputed consultants and researchers.
While a debate and discussion on the difference in trade imbalance figures and the current account ratio in 2005-06 goes on in the banking and business circles, the market analysts and bankers consider the current level of foreign exchange reserves at $10.6 billion with the State Bank “not enough” as rising international oil prices and growing consumerism of a small neo-rich class--that has benefited from the present government’s economic policies--is pushing up imports of a large variety of consumer items. The official trade statistics show about $4.7 billion of “other items” without any elaboration. A more than Rs250 billion worth of imports are said to be a large variety of goods that is consumed only by the neo-rich class and this consumption is being presented as growing prosperity of the emerging middle classes of Pakistan.
“A foreign exchange reserve of $10 billion plus with the State Bank of Pakistan does not meet even four months import requirement of goods and services”, a banker said while referring to central bank’s estimate of over $33 billion import of goods and services in 2005-06.
“It means that an average of $2.75 billion is needed for a month’s imports and we need at least $16.50 billion to ensure six months import billing,” he added.
“And don’t forget there may be a minimum rise of 10 per cent in $33 billion of import of goods and services bill during 2005-06 and in 2006-07. The total import of goods and services bill may touch $37 to 38 billion,” the banker warned.
He pointed out Pakistan’s foreign exchange position was now precarious. Latest trade figures for July and August show that Pakistan’s trade imbalance amount to $1.78 billion.
“The deficit in goods trade in the current fiscal year may exceed $15 billion,” he indicated.
Bankers say that government is pinning hopes on privatisation to generate about $2 billion, remittances about $4.5 to 5 billion, flotation of bond $1 billion, GDR of OGDC about $1 billion and exports to fetch $18 to 19 billion. But recent reports say that Standard and Poor’s is giving a hard look at the credit rating given to Pakistan and it is being reviewed. “Any downgrading in Pakistan’s credit rating may upset all projections of foreign exchange inflows,” an analyst in a brokerage house warned.
