LAHORE, April 1: Federal Commerce Minister Hamayun Akhtar Khan has said the inflationary tendency in the economy is due to the growth. Talking to journalists after the signing of a memorandum of understanding between the Lahore and Brussels chambers of commerce and industry here on Saturday, he said the government was maintaining a balance between inflation and growth. It could stop the inflation from growing but the economic growth would also stop as a result.

About rise in the trade deficit, he said that it had increased owing to increased import of essential commodities like food, urea and sugar. Two-and-a-half-billion dollars had been spent on such imports. Another 500 to 600 million dollars had been incurred on import of cellular phones and 250 dollars on import of cars.

He said the trade deficit increase had not affected the overall economic situation because there had been no decrease in foreign exchange reserves. Increase in trade deficit did not provide any cause for concern as it was only a fraction of balance of payments and a small part of monetary policy.

The premium being charged on purchase of new cars had decreased significantly due to increase in availability as a result of imports. He said premium on CNG cars had not decreased for it was charged on the basis of CNG kits.

About the possibility of severing trade relations with Denmark on account of publication of blasphemous cartoons, the minister said that no country had severed its relations with Denmark or the European Union so far.

He said the EU was the biggest trading partner of Pakistan, constituting 30 per cent of the total foreign trade of Pakistan. Textile exports to EU were 600 to 700 million dollars.

The Karachi Expo Fair, he said, had been highly successful as 350 targeted buyers from 57 countries had visited there and he had been there to receive all of them personally. Over 3,500 people had visited the fair.

Speaking after signing of the MoU between the Lahore and Brussels chambers of commerce and industry earlier, the minister said that it was very important on account of the dominant position of Belgium in EU to which 50 to 60 per cent of textiles from Pakistan were exported. He said the two chambers should implement the MoU as soon as possible.

LCCI president Mian Shafqat Ali said the accord was a part of the strategy of achieving export-led growth. The two chambers would identify areas for increasing economic cooperation and starting joint ventures through exchange of information and delegations.

Brussels chamber of commerce and industry managing director Oilivier Willcox said that Belgium had a population of only 10 million but it had 29 per cent share in EU trade. Its exports were equal to half of exports of China and 76 per cent of its GDP.

Former president Mian Misbahur Rehman said the LCCI planned to send a trade delegation to Europe and Belgium in May.