ISLAMABAD: Pakistan’s trade deficit in merchandise edged up nearly 37 per cent to an all-time high of $32.58 billion in 2016-17 because of falling exports and rising imports.

When the PML-N came to power in 2013, the country’s annual trade deficit was $20.44bn. It has been on the rise since then.

On a monthly basis, the trade deficit stood at $2.63bn in June, showing a decline of 6pc from a year ago, according to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.

An official of the Ministry of Commerce said the rising import bill of capital goods, petroleum products and food products was the sole reason for the increase in the trade deficit. Exports fell despite an incentives package announced by the prime minister to help boost foreign sales of Pakistani goods.

As a result, the higher-than-expected trade deficit is now posing a threat to the country’s balance of payment. According to PBS data, the overall import bill rose 18.7pc to $53bn for 2016-17. In June alone, it increased 2.16pc to $4.54bn on an annual basis. The import bill was $44.95bn in 2012-13.

Exports fell 1.63pc year-on-year to $20.45bn in 2016-17. They grew 16.16pc in June, 5pc in April and 3pc in March. Excluding these three months, exports recorded negative growth in the rest of the last fiscal year.

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

Talking to Dawn, Commerce Minister Khurram Dastgir said exports witnessed impressive growth in June, but avoided commenting on the rising import bill.

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

The Ministry of Commerce recently decided to make changes in the trade policy framework. Now the ministry wants to implement it in 11 months, which seems next to impossible.

Under 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, July 12th, 2017