Govt sees $6b reduction in trade deficit in FY19

PM aide expects exports to reach record high of $27b

ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) government is hoping to slash the trade deficit by $6 billion by the end of ongoing financial year by suppressing imports, announced Adviser to Prime Minister on Commerce Abdul Razak Dawood.

“The trade deficit has narrowed by $1 billion in January and we are hopeful that it will go down by $5-6 billion this year,” Dawood said while talking to journalists on Tuesday, adding exports were expected to reach $27 billion for the first time in the country’s history.

The PM aide pointed out that the government was focusing on restricting imports to curtail the trade deficit and made some changes to the duty structure to revive the industry. The government wanted the spread of industrialisation in the country, therefore, it introduced a reform package by bearing a revenue deficit of Rs7 billion.

He stressed that the government was making efforts to find new markets like the Gulf Arab state of Qatar. “We will break the record of $25 billion in exports (this year),” he declared, adding that the $26-billion target was realistic and the $27-billion goal hinted at optimism on the part of the government.

Lower crude oil prices in the global market and ban on the import of furnace oil were also the reasons behind the narrowing trade deficit, he said.

The adviser emphasised that the government would also address the issue of tax refund claims of exporters after the reform package was approved in the next couple of days.

He pointed out that the government had not touched the iron and steel sector due to some issues, but the area would get attention in the June budget.

He said the reform package was not a numbers game, stressing that it would revive the industry and boost trade.

He was of the view that Pakistan was moving towards de-industrialisation when the Pakistan Tehreek-e-Insaf (PTI) government took over. “The government is now working on a new industrial policy and its draft has been finalised,” he said.

The government would also seek input from the stakeholders before seeking approval from the cabinet, he said. “The new industrial policy will not be ‘cut and paste’.”

Dawood explained that the government had imposed duties on luxury goods in the first mini-budget in a bid to suppress imports. At the same time, he defended his liberal trade policy during the Musharraf government, but said “now is the time to protect the industry in order to ensure its revival”.

He revealed that a team of the European Union visited Pakistan and raised concern over bonded labour, child labour and international non-governmental organisations. “We are weak on these three points, but we have time to address them,” he remarked.

Responding to a question about the closed Pakistan Steel Mills, the PM adviser said there were three options to run the steel mill - either to privatise it, lease out to investors and the government keeps its control.

“Chinese and Russian companies have expressed interest in taking over the steel mill on lease,” he said.

Published in The Express Tribune, January 30^th, 2019.

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