ISLAMABAD, Aug 12: Trade deficit soared by 164.23 per cent during the first month of the current fiscal year to $724 million against $274 million during the same month last year, according to official figures made available to Dawn on Friday. The government in the trade policy for 2005-06 had projected trade deficit at $4.79 billion as against $6.216 billion recorded in 2004-05.

The statistics showed that the trade deficit rose because of massive increase of over 36 per cent in import bill in July 2005. While the growth in export stood only at around 8 per cent during the same month. Exports stood at $1.270 billion in July 2005 as against $1.183 billion over the same month of the last year.

The major factor of trade deficit was the massive increase in the world oil prices, which reached to a record $66 per barrel, as import of petroleum crude and petroleum products emerged as the largest item in country’s import bill during the month under review.

The import bill during the month reached to $1.994bn as against $1.457bn during the same month of the last year, showing an increase of 36.85 per cent. Besides import of oil, growth in the imports of machinery, metal, and food items also raised the country’s import bill.

An official source said that following the zero rating of taxes and duties on five major sectors — textile, leather, sport, surgical and carpet, it was likely that the import bill would increase manifold in coming months.

They said there would be robust increase in the import of machinery and raw materials and intermediate goods during the next few months following the rationalization of customs tariffs on various products in the budget of 2005-06.

The officials said that the import bill also increased because of allowing duty-free import of sugar particularly from India, wheat and wheat flour, meat, live animals, five vegetables, fertilizers to meet the domestic demand.

Import of construction and mining machinery, raw materials, intermediate goods like completely knocked down automobile kits, iron and steel, plastic materials, synthetic fibre and pesticides also recorded substantial increase during the month under review.