KARACHI: Pakistan’s trade deficit contracted over 11% to $21.5 billion in first eight months of the current fiscal year (July-February 2018-19), primarily because of a steep decline in imports, data released by Pakistan Bureau of Statistics suggest.
Senior Vice President FPCCI Mirza Ikhtiyar Baig said the rupee devaluation and reduced duties on imported raw material would enable overall exports to reach at most $25 billion, “There is no way that the target of $27 billion could be achieved for the current fiscal year.”
He said according to central bank private sector credit stood at Rs570 billion, of which Rs470 billion was working capital, which was usually invested in real estate and stock market. “Only Rs100 billion would be spent on import of plant and machinery. Having said that, with 14 percent markup and no one ready to forward book USD even at a premium of Rs10, import of plant and machinery is not feasible at all.”
Overall imports during July-February FY19 dropped 6.13% to $36.6 billion. Exports during the first eight months of the current fiscal year amounted to only $15.1 billion, higher by just 1.85% or $275 million.
The trade balance in February 2019, as compared to the same month a year ago, improved but only because of contraction in imports. The trade deficit shrank one-fifth from $2.9 billion to $2.3 billion in February. In absolute terms, there was a reduction of $577 million in the trade deficit on an annual basis.
In February 2019, the imports in dollar terms declined to $4.1 billion compared to $4.76 billion in February last year, which reflected a contraction of over 12.2%, reported the PBS. Exports also decreased by 0.4% to below $1.9 billion in February, a net reduction of $7 million only.
On a month-on-month basis, the exports contracted 7.5% in February over the preceding month. Exports decreased $154 million to $1.9 billion. Imports also shrank 7.2% to $4.2 billion last month. Resultantly, the trade deficit contracted 6.9% to $2.3 billion in February over January.
Over Rs400 billion of refund claims are stuck up causing severe liquidity crunch for the export oriented industry. Finance Minister had announced in the mini-budget that discountable promissory notes would be issued to settle Rs80 billion worth of claims, but the noted have not been issued as yet.