Pakistan’s trade deficit exceeds annual target in current fiscal year

Islamabad [Pakistan], February 3 (ANI): Pakistan’s trade deficit widened to USD 28.8 billion in the first seven months of the current fiscal year more than the annual target set by the federal government further increasing the foreign borrowing requirement to bridge the yawning gap.
Pakistan Bureau of Statistics (PBS) released data on Wednesday which showed that the trade deficit during the July-January period of the current fiscal year was USD 13.8 billion, or 92 per cent more than the same period of the previous year, as noted by Express Tribune.
The government had set the annual trade deficit target at USD 28.4 billion that it breached in the seventh month of the fiscal year.
The government’s external sector projections are heavily dependent on the trade deficit estimates. The higher deficit will now require more foreign borrowing compared to the government’s initial estimates.
Pakistan’s federal government has already taken USD 10.4 billion in foreign loans during the first half of the current fiscal year, as analysed by Express Tribune.
The central bank’s foreign currency reserves are constantly on the decline and dipped further to USD 16.1 billion due to the increasing trade deficit.
On the other hand, imports in the July-January period increased 59 USD to USD 46.5 billion. In absolute terms, the imports grew USD 17.2 billion, according to the PBS.
The central bank has introduced a cash margin requirement (CMR) for more imported goods besides curtailing consumer financing to ease the import pressure.
For the first time, a slowdown was witnessed in imports, as the monthly bill was USD 1.7 billion less than the preceding month.
However, it is not clear whether the slowdown is temporary or will take hold in the coming months. Exports increased 24 per cent in the first seven months of the current fiscal year and stood at USD 17.7 billion as compared to USD 14.3 billion in the same period of previous year, according to the PBS. In absolute terms, there was an increase of USD 3.4 billion in exports.
During the period under review, exports were equal to 67 per cent of the annual target of USD 26.3 billion, indicating that the target will be met comfortably.
The Ministry of Commerce now projects exports to touch USD 31 billion in the full fiscal year. In January 2022, imports were registered at USD 5.9 billion, showing an increase of USD 1.1 billion or nearly one-fourth over a year ago.
Consequently, the trade deficit widened 26.5 per cent year-on-year to USD 3.4 billion in January, as noted by Express Tribune. (ANI)