Trade gap swells to $7bn


Islamabad—The trade deficit rose nearly 30 per cent year-on-year to $7.06 billion in the first quarter of 2016-17 mainly because of falling exports coupled with a double-digit increase in imports. The deficit stood at $2.31bn in September, up 33.4pc from $1.73bn recorded in the corresponding month of 2015, the Pakistan Bureau of Statistics (PBS) said. An official source in the Ministry of Commerce attributed the widening deficit to the increase in imports of non-essential items.
However, a surge in imports was seen in machinery, metal group and essential food items, like pulses, during the period under review. In July-September, the overall import bill rose 10.7pc year-on-year to $11.74bn. The import bill in September alone increased 11.47pc on an annual basis to clock up at $3.85bn. Federation of Pakistan Chamber of Commerce and Industry (FPCCI) President Abdur Rauf Alam told Dawn it is high time the government came up with incentives for the export sector.
He said falling exports are now a global phenomenon and government support is urgently required in Pakistan in line with worldwide practices. The Indian government has given top priority to the export sector, he added. Exports of merchandise dropped 8.98pc year-on-year to $4.68bn in the first three months of the fiscal year, which indicates low international demand. In September alone, exports dropped 10.60pc to $1.54bn on an annual basis. The decline in exports is due to slow proceeds of the textile sector, which accounts for about 56pc of total exports, and other items, like petroleum, jewellery, leather products, engineering goods, furniture, cement and guar.
Under a three-year strategic trade policy unveiled earlier this year, the government set an annual export target of $35bn by 2018. Yet exports are falling in terms of value as well as volume. The government announced the trade policy framework in April. Still the support measures announced for boosting exports July 1 onwards have yet to be implemented. The Ministry of Commerce has yet to receive any funds from the Ministry of Finance to stop the decline in exports. The Ministry of Finance has withheld more than Rs30bn under the Export Development Surcharge (EDS).
The EDS is being charged on export proceeds to be used for the facilitation of exporters. However, the finance minister has allegedly been using that amount for other purposes over the years. Pakistani exporters are operating in a difficult environment: global trade has contracted, as most countries with a similar product-mix have suffered a decline in exports, the ministry said in a statement. “Due to multiple exogenous and endogenous factors, we think an adjustment in the export targets will have to be made,” the ministry said.—Agencies