ISLAMABAD: Merchandise trade deficit soared by almost 56 per cent in July, the Pakistan Bureau of Statistics said on Thursday.
It rose to $3.2 billion as the new fiscal year opened on the back of higher growth in imports and a lower export bill.
The rising trade deficit poses one of the most serious challenges for the government in the last year of its current term.
The last fiscal year saw the trade deficit rise to an all-time high of $32.58bn, representing year-on-year growth of 37pc.
When the PML-N came to power in 2013, the country’s annual trade deficit was $20.44bn. It has been continuously on the rise since then.
Imports recorded a growth of 37pc to $4.84bn in July from $3.54bn a year ago. The import bill is rising due to an increase in the arrival of capital goods, petroleum products and food products. The overall import bill rose 18.7pc to $53bn for 2016-17.
Exports continued to show a rebound that began early in 2017, recording a growth of 10.58pc in July. Export proceeds went up to $1.63bn from $1.47bn a year ago.
Exports grew 16.16pc in June, 5pc in April and 3pc in March. Overall exports fell 1.63pc to $20.45bn in 2016-17.
An official of the commerce ministry said it is working with full vigour on both policy and administrative fronts regardless of the current political situation. He said the ministry continues its advocacy for the timely disbursement of refunds as well as payments under the premier’s trade enhancement initiative.
The government has so far released almost Rs7bn as cash subsidy on export proceeds under the prime minister’s support package.
Negotiations continue on the proposed free trade agreements (FTAs) with Thailand and Turkey as well as the review of existing FTAs and preferential trade agreements. Work is at an intermediate stage on the global launch of a Pakistan branding campaign and the review of the trade policy within the current fiscal year.
Exports are in decline although the government claims that it is providing the industry with round-the-clock power supply since November 2014. Similarly, the government is also providing export-oriented industries with a concession of Rs3 per unit in the electricity tariff since 2016.
The commerce ministry recently announced that it will make changes in the trade policy framework.
Under Strategic Trade Policy 2015-18, the ministry notified five cash support schemes to improve product design, encourage innovation, facilitate branding and certification, upgrade technology for new machinery and plants, provide cash support for plant and machinery for agro-processing and give duty drawbacks on local taxes.
Exporters have yet to submit claims for the subsidy due to “flaws in these schemes”.