Pakistan Bureau of Statistics (PBS) has revealed a 56% increase in merchandise trade deficit in July 2017. Lower exports bill and increased growth in imports led to a huge trade deficit of $3.2 billion in the new fiscal year, posing a great challenge for the government.
The year on year trade deficit grew by 37% to an all-time high $32.58bn in the last fiscal year.
A Headache for the Government
The PML (N) government took charge when the annual trade deficit was $20.44bn and it has been rising since then, which is an alarming situation for the government.
While the imports bill rose by 37% from $3.54 billion to $4.84 billion year-on-year in July, the exports bill also grew by 10.58% to $1.63 billion from $1.47 billion.
The overall import bill went up to $53 billion for 2016-17, whereas the exports bill declined by 1.63% to $20.45 billion.
Exports are on the rise, recording a growth of 3% in March, 5% in April, and 16.16% in June.
Ministry of Commerce’s Efforts
Despite the ambiguous political situation in the country, the Ministry of Commerce is doing its best to tackle all issues at all administrative and policy facets and timely disbursement of refunds as well as payments under the premier’s trade enhancement initiative, says an official of the ministry of commerce.
Having released Rs 7 billion under the Prime Minister’s Support Package as cash subsidy on export proceeds, the government is reviewing existing free trade agreements (FTAs) as well as new FTAs with Turkey and Thailand.
The review of trade policy and Pakistan branding campaign on a global level are underway. Since 2016, the government is offering a discount of Rs. 3 per unit electricity to the export-oriented industries.
In a bid to strengthen the trade industry, the Ministry is ordering the cash support schemes to improve Under Strategic Trade Policy 2015-18.
Some of the highlights of this initiative are 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
- Give duty drawbacks on local taxes
Exporters have identified flaws in these schemes and are yet to submit their claims for the subsidy.