OUR trade deficit widened one hundred per cent to $ 11.7 billion in the first quarter of current fiscal year due to an exceptional surge in imports that outpaced the increase in exports.
The external trade figures released by Pakistan Bureau of Statistics on Monday showed that the trade deficit far exceeded the expectations.
This widening trade deficit clearly suggests that by June next year, it will be far higher than the target of $28.4 billion set by the government.
The trade gap has been widening since December last year, mainly led by exponential growth in imports and comparatively slow growth in exports.
There is no denying that there has been substantial increase in the prices of both petroleum products and other essential commodities in the international market over the last few months, which contributed to increase in our import bill.
However, this rapid growth in imports will either increase the external borrowing requirement or further dent the official foreign exchange reserves.
Hence, it is time for the government’s finance team to take the requisite steps to curb this trend which always compel us spread the begging bowl before the international lenders such as the IMF. This also comes at a cost as we have to follow their conditions such as enhancing the power tariff.
Instead of raising tax revenues through imports, the government must impose heavy duties to discourage import of insignificant items such as that of cosmetics.
This issue of trade imbalance will continue to haunt us until and unless we go for import substitution and substantially enhance our exports.
For this we will have to diversify our export basket and encourage and fully support the productive sectors including agriculture, livestock and industries. In the short term, we need to further entice overseas Pakistanis to send their remittances to reduce this deficit to some extent.
Roshan Digital Account has proved to be an important instrument in attracting remittances from the expatriate community. More such steps are required that also lure their investment in different sectors of the economy.
