ISLAMABAD: The month of November of the current fiscal year (FY22) saw a steep rise of 162.4 per cent in trade deficit which was driven largely by more than triple increase in imports compared to exports from the country.
The reversing trend in trade deficit was witnessed for the fifth consecutive month as merchandise trade deficit reached $5.107 billion in November against $1.946bn over the corresponding month last year, according to provisional data released on Wednesday. This is the highest trade deficit recorded in a single month in terms of value.
The current year started with a rising import bill which poses a serious threat putting pressure on the external side. The import bill in November reached an all-time high of $8.01bn from $4.12bn over the corresponding month last year, indicating an increase of 94.41pc.
Adviser to the Prime Minister on Commerce Razak Dawood said in a tweet that data on imports was being analysed and would be shared shortly. He only shared data on export proceeds in November to portray a positive image of his government.
The highest-ever increase in imports also helped the Federal Board of Revenue collect maximum revenue at import stage — sales tax, withholding tax and customs duty. However, the government’s battle against the bloated trade deficit is reversing and may cause pressure on the external side because of all-time high imports.
The first five months of the current fiscal year saw a rise of more than 117.25pc in trade deficit. The merchandise trade deficit rose to $20.746bn in July-November 2021 from $9.549bn over the corresponding months last year.
The Ministry of Finance believes that an increase in remittances, growth in export proceeds and Roshan Digital Accounts will help mitigate the pressure to a large extent.
Trade deficit had reached an all-time high of $37.7bn in FY18. However, government’s measures led to a drop in it to $31.8bn in FY19 and $23.183bn in FY20. The trend reversed and trade deficit stood at $30.796bn in FY21.
The trade gap has been widening since December last year, mainly led by exponential growth in imports and comparatively slow growth in exports. The import bill in July-November 2021 rose by 71.59pc to $33.111bn against $19.296bn over the corresponding months last year. In November 2021, the import bill edged up to $8.01bn from $4.12bn over the same month last year, reflecting an increase of 94.41pc.
One of the major initiatives of the government to encourage imports of raw materials also pushed up the import bill. Oil prices have also increased substantially, which pushed up the import bill because of high demand for energy in the domestic market.
A surge was noted in imports of vehicles, machinery as well as vaccines, pushing the import bill. In FY21, the import bill surged by 25.8pc to $56.091bn from $44.574bn the previous year.
Exports posted a growth year-on-year of 27pc to $12.365bn in July-November 2021 against $9.747bn over the corresponding months last year. In November 2021, exports saw a growth of 33pc to $2.903bn against $2.174bn over the same month last year.
Razak Dawood termed the growth in export proceeds in November a historic one, saying the export target for five months was $12.2bn. The monthly target for November was $2.6bn.
Export proceeds went up by 18.2pc to $25.294bn in FY21 from $21.394bn over the last year.
Published in Dawn, December 2nd, 2021