ISLAMABAD, Sept 10: With imports outstripping the pace of export growth, the country’s trade deficit ballooned to an unprecedented $3.522 billion during the first two months (July-August) of the current fiscal year, up by 47.67 per cent from $2.385 billion over the corresponding period last year.

Higher imports of luxury goods, including mobile phones, vehicles, and bulging oil bill continued to impact on deficit despite the fact that the government introduced additional customs duty on more than 370 items.

Analysts, however, hoped that the decreasing trend in oil price in international market may reduce the import bill, which crossed the $11-billion-mark last year, the highest in the country’s history.

An official in the finance ministry said that imports were likely to show a declining trend due to the regulatory duty in the month ahead. However, the average import bill during the last two months was $3.5 billion, showing no let-up in the rising trend.

Official figures released here on Wednesday by the Federal Bureau of Statistics (FBS) showed that the import bill reached $7.011 billion in July-August of the current fiscal year against $5.321 billion over the same months last year, showing an increase of 31.77 per cent.

On monthly basis, the import bill recorded slightly a lesser growth of 26 per cent in August 2008 as it stood at $3.461 billion against $2.747 billion over the same month last year. Like last year, the government has not projected any import target for the year 2008-09. The import bill last year touched all time high at $40 billion.

However, this highest-ever import bill has a deeper impact on the dwindling forex reserves of the country as well as on the health of the rupee.

On the other hand, the export proceeds reached $3.489 billion in July-August 2008 against $2.936 billion over the corresponding months of last year, showing an increase of 18.85 per cent.

On monthly basis, the export recorded a growth of 8.16 per cent to $1.584 billion in August against $1.464 billion over the same month last year.

The trend shows that the export growth depicted a nominal growth in August mainly because of steady decline in export of textile and clothing, the main commodities of exports. _

After achieving the export target of last year, the government projected an export target of $22.10 billion for the year 2008-09. It is expected that the target may be achieved as the start of the new fiscal year showed an average 18 per cent growth in exports in the first two months of the current fiscal year.

The official said that the import bill will also increase this year because of rising import bill of wheat, fertilisers etc to cope with the domestic shortages. _

According to the official, the export target was the only bright spot this year -- mainly because of depreciation of the rupee and diversification of exports through trade diplomacy of the previous government.

The previous government’s policy for not depreciating the overvalued rupee against the dollar had retarded exports. This point to the fact that a natural diversification of exports is now under way -- moving away from conventional textile products to new non-conventional items, such as industrial goods, petroleum products and food group. However, the pace of diversification is painfully slow.