ISLAMABAD, Sept 16: Pakistan’s trade deficit widened by 36.66 per cent in the first two months (July-August) of the fiscal year 2006-07 to its highest level as oil prices hit and imports of petroleum and capital goods also set a record.

The Federal Bureau of Statistics said on Saturday the July-August trade gap totalled $2.132bn as against the $1.560 billion recorded the same period last year.

Imports climbed 17.86 per cent to $4.885 billion during the period under review as against $4.230 billion last year, while exports increased by 6.87 per cent to $2.853 billion during the July-Aug as against $2.670 billion the previous year.

The rising trade deficit is going to have serious implications for the balance of payments particularly on current account and also on the health of the rupee.

An analyst said the rupee had already facing downward pressure against the greenback during the last two months and it looked set to shed some value in the upcoming weeks.

However, the IMF mission at the conclusion of review of Annual Article IV Consultation recently commended the State Bank of Pakistan (SBP) policy of monetary tightening, which helped in maintaining the stability in inflation, in health of rupee as well as curtailing the imports.

The IMF said the prospects for sustained high economic growth in 2006-07 and over the medium-term remain excellent, with evidence of a strong pick-up in domestic and foreign direct investment, as Pakistan has increasingly been viewed as a promising destination for investment.