Pakistan's trade deficit widens to record $30bn

Published June 13, 2017
In this file photo, a crane removes a container from a ship.—AP/File
In this file photo, a crane removes a container from a ship.—AP/File

ISLAMABAD: The country’s trade deficit ballooned by 42 per cent year-on-year to an all-time high of $30 billion in the first 11 months of the current fiscal year on the back of falling exports and a sharp increase in the import bill.

The country’s annual trade deficit was $20.435bn when the PML-N came to power in 2013. It has been on the rise since then due to rising imports and falling exports.

Trade deficit stood at $3.465bn in May, a rise of nearly 61pc compared to the same month a year ago, according to the data released by the Pakistan Bureau of Statistics on Monday.

Two reasons explain the trade deficit: rising import bill of capital goods, petroleum products, and food products; and a steep fall in exports despite prime minister’s support package to boost exports. The trade deficit is said to be posing a serious threat to external balance of payment.

In July-May, the overall import bill rose 20.6pc year-on-year to $48.54bn. In May alone, it increased 28pc to $5.09bn.

In the year 2012-13, the import bill was at $44.950bn. It is expected to reach over $53bn this fiscal year.

Exports fell 11pc year-on-year to $1.627bn in May after witnessing paltry growths in the previous two months. Export proceeds grew 5pc in April and 3pc in March.

Exports are in decline despite government claims of providing the industry with round-the-clock power supply since November 2014. Similarly, the government was also providing Rs3 per unit concession in electricity tariff since 2016 to export-oriented industries.

In the 11 months through May, the export proceeds fell to $18.54bn from $19.14bn a year ago.

Under a three-year Strategic Trade Policy unveiled last year, the government set an annual export target of $35bn by 2018. To boost exports, the prime minister announced a subsidy package of Rs180bn for textile, clothing, sports, surgical, leather and carpet sectors. The impact of this package on exports has yet to be seen.

The government has recently removed the commerce secretary, Azmat Ali Ranjha, for failing to promptly implement the trade policy. He was replaced by Younis Dagha, who was shunted out from the Ministry of Water and Power for his alleged failure to manage power load-shedding issues.

Under the Strategic Trade Policy 2015-18, the Ministry of Commerce notified five cash support schemes to improve product design, encourage innovation, facilitate branding and certification, upgrade technology for new machinery and plants, provide cash support for plant and machinery for agro-processing and give duty drawbacks on local taxes.

Exporters have yet to submit claims for the subsidy due to “flaws in these schemes”.

Published in Dawn, June 13th, 2017

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

A bloody year
07 Oct, 2024

A bloody year

A YEAR after Hamas and other Palestinian fighters launched an unprecedented attack on Israel, the Middle East stands...
Bleak cotton outlook
07 Oct, 2024

Bleak cotton outlook

THE extremely slow arrival of phutti at the ginning factories of Punjab and Sindh so far indicate a huge drop in the...
Killjoy neighbours
07 Oct, 2024

Killjoy neighbours

AT the worst of times in their bilateral relations, India and Pakistan have not shied away from carrying out direct...
Peak of success
06 Oct, 2024

Peak of success

IT started with the ascent of Nanga Parbat in 2017 and ended with the summit of Tibet’s Shishapangma on Thursday....
Indian visitor
06 Oct, 2024

Indian visitor

AMONGST the host of foreign dignitaries expected to fly into Islamabad for the SCO Council of Heads of Government...
Violence once again
Updated 06 Oct, 2024

Violence once again

The warring sides must rein in their worst impulses and prioritise the nation’s well-being over short-term gains.