ISLAMABAD, July 13: Pakistan’s trade deficit widened to highest ever $13.54 billion in the outgoing fiscal year 2006-07, up by 12.83 per cent or ($1.54 billion) from $12 billion recorded during the same period last year.

As growth in exports dipped and imports grew at slightly higher rate during the year under review, it resulted in record trade deficit. The government had projected a trade deficit of $9.4 billion for fiscal 2006-07 as against $12.13bn deficit recorded during 2005-06.

Official figures obtained by Dawn on Friday showed that the export proceeds remained short of the target by 6.9 per cent ($1.284 billion) to $17.316 billion during the year under review as against $18.6 billion set for the same period.

On monthly basis, the export proceeds stood at $1.573 billion in June 2007 as against $1.52 billion over the same month of the last year, indicating a growth of 3.48 per cent.

This would be the straight two consecutive years, when the export proceeds missed the original targets announced in the respective trade policies. This dismal performance in the country’s export is due to lack of diversification, mostly depending on textile sector and low industrial growth during the year under review.

Imports climbed by 8.1 per cent to $30.86 billion during the year 2006-07 as against $28.55 billion over the corresponding period last year. This high import growth resulted in pushing the trade deficit further higher. The import bill has been estimated at $28 billion for the current year.

The import was dominated by high oil prices that hit the economies of developing countries like Pakistan, food items and auto sector also got massive weight in the list of imports.

Analysts said the huge trade deficit also put immense pressure on current account deficit, which was financed by selling local units through privatisation, foreign direct investments and remittances sent by overseas Pakistanis.

They have been identifying the weakness in the policy and urging the government to improve the trade balance, which could eat up the hard-earned foreign exchange reserves of the country. The government has been relying on financing trade deficit instead of making strategy to bridge the gap.

Analysts also criticised the government policies, which are only focussing on increasing revenue or reducing the debt-to-GDP ratio rather to devalue the currency to make Pakistani produce more competitive with the neighbouring countries.

An official in the commerce ministry said highest inflation, capital cost and energy prices during the last few years rendered Pakistani products less attractive for buyers in international market. This can be one of the reasons for dwindling exports during the first nine months of the current fiscal year, he added.