ISLAMABAD: Despite the government’s attempts at reducing the trade deficit, Pakistan’s overall exports to the rest of the world remained dismal during the first nine months of the ongoing fiscal year, standing only at $18 billion.
While exports plunged almost 6% during the July-March period, imports in the same period grew on an average of 3%, widening the trade deficit by 15.4%, said the Pakistan Bureau of Statistics on Tuesday.
In absolute terms, the trade deficit widened to $16.2 billion in first three quarters of the current fiscal year, which was roughly $2 billion more than the projections of the International Monetary Fund. The wide gap between actual trade deficit and the IMF’s projections will also have implications on overall financing requirements.
In its latest report that was released early this month, the IMF had projected a $14.1-billion gap between exports and imports for the July-March period.
Pakistan’s exports contracted 5.95% in July-March, amounting to $17.93 billion. The export receipts were $1.1 billion less than the exports made in the comparative period of the previous fiscal year. It was more than the amount the country raised from international debt markets by floating Islamic bonds. Exports were $413 million less than IMF’s projections.
Pakistan has been availing duty-free access to European markets and also trying to win similar benefits from the United States. Although, the country is said to have made $1 billion additional gains by availing the GSP Plus facility, its overall exports are badly hurt due to loss of competiveness and extremely narrow export-base.
Contrary to contraction in exports, Pakistan’s import bill increased to $34.1 billion in the first nine months of the fiscal year, showing an increase of $1.1 billion or 3.1% over last year’s imports. The IMF had projected that Pakistan’s imports would grow to $32.5 billion in first nine months – an assessment that went off the mark by $1.6 billion. The increase in imports has occurred despite a decreasing oil import bill, caused by a plunge in global oil prices.
National planners have projected a 5.8% growth in exports and 6.2% growth in imports for the current fiscal year. The government has projected that imports in the current fiscal year will increase to $44.2 billion as against $26.99-billion of exports, meaning the trade deficit will stand at $17.2 billion. The IMF has recently revised its trade projections for Pakistan. As against earlier projections of 1% growth in exports, the IMF sees a negative half percentage point growth. Similarly, it has lowered import growth projections from 6% to 3.2%.
The higher than the projected trade gap may compound the government’s woes that is struggling to achieve the upward revised target of building foreign currency reserves. The IMF has asked the government to increase State Bank of Pakistan’s gross official reserves to $15.43 billion by the end of the current fiscal year.
The yearly trade figures also portray similar trends. In March alone, the trade deficit widened 13.7% to $1.58 billion, according to the PBS.
As against $2.23 billion exports of March last year, the receipts from exports stood at $1.9 billion last month, showing contraction of 13.5%. The imports in last month also plunged to $3.5 billion – lower by 3.1% over imports in the same month previous year.
On a monthly basis, trade deficit in March also widened by 8.5% over February due to 2.6% growth in exports and 5.2% increase in imports, data from PBS showed.