Trade deficit contracts 30% in Jul-Feb FY24

PBS, commerce ministry release contrasting trade figures

ISLAMABAD:

Pakistan’s trade deficit shrank 30% to $14.9 billion during the first eight months of the current fiscal year due to a steep reduction in imports but exports fell for the second consecutive month, which prompted the commerce ministry to release contradictory figures.

Two government departments – Pakistan Bureau of Statistics (PBS) and the Ministry of Commerce – released contradictory trade data on the same day. The commerce ministry appeared to be hiding the poor performance of the caretaker setup in its last month in power by providing figures which were far from reality

Hours after the PBS reported the latest trade data, the Ministry of Commerce claimed that exports had gone up. The ministry did this after noticing a dip in shipments for the second month in a row.

In a statement, the commerce ministry showed higher-thanactual exports and lower-thanactual imports to showcase better performance at the end of the interim government’s term.

PBS reported that during JulyFebruary of fiscal year 2023-24, the gap between imports and exports amounted to $14.9 billion. The deficit was $6.4 billion, or 30.2%, less than the comparative period of last year.

PBS reported that during JulyFebruary of fiscal year 2023-24, the gap between imports and exports amounted to $14.9 billion. The deficit was $6.4 billion, or 30.2%, less than the comparative period of last year.

However, the Ministry of Commerce claimed in its statement that “the trade deficit narrowed to $13.87 billion in 2023-24, compared to $21.995 billion in 2022-23”. It presented the figures by taking Customs-based data.

Imports during the first eight months of the current fiscal year reached $35.2 billion, down $4.8 billion, or 11.9%, according to the national data collecting agency

But the Ministry of Commerce said imports amounted to $34.2 billion, understating them by $1 billion to show a 14% reduction in the inflow of goods. “Imports decreased 14.1% to $34.2 billion in 2023-24, compared to $39.81 billion in 2022-23,” said the ministry

Tight control over imports over the past many months has lessened pressure on Pakistan’s foreign exchange reserves. The low financing available with the government leaves it with no option but to keep managing international trade.

Read Trade deficit shrinks to $13.1b

PBS stated that exports picked up during July-February FY24 and stood at $20.4 billion. There was an addition of $1.7 billion, or nearly 9%. But the commerce ministry claimed a 14.2% increase in shipments from Pakistan.

“For the period Jul-Feb 2023-24, exports increased by 14.2% to $20.34 billion, from $17.8 billion in 2022- 23,” said the ministry. In order to claim a higher growth in exports, it understated last year’s figure by $800 million. PBS reported that the gap between export receipts and import payments marginally shrank to $1.7 billion in February over the same month a year ago. In absolute terms, there was only $34 million reduction in deficit.

On its part, the commerce ministry understated the monthly deficit at $1.6 billion by exaggerating the deficit and understating exports for February 2023.

PBS said that on a year-on-year basis, exports amounted to $2.573 billion in February, higher by $384 million, or 17.5%. The Ministry of Commerce claimed that “according to pre-PBS Customs-based data, released by PRAL, exports increased by 30% to $2.575 billion in February 2024, from $1.984 billion in February 2023.” It understated last year’s exports by $205 million.

The ministry claimed that “Pakistan’s trade balance improved in February, narrowing by 18.2% compared to the same month in the previous fiscal year”. But the actual reduction in trade deficit was 2%, according to the PBS.

PBS reported that imports dropped 9% at $4.3 billion last month. As a result, the trade deficit narrowed one-fourth to $1.7 billion. The commerce ministry also released a statement of the caretaker commerce minister about what it called was “the positive development”.

Commerce Minister Gohar Ejaz said, “This is the third consecutive month when exports are approaching 30% growth. These grew by 28% in December, 27% in January and now in February they have grown by 30% year-on-year.”

PBS data showed that on a month-on-month basis, the trade deficit shrank 13.5%. Exports dipped 7.8% to a little below $2.6 billion last month compared to January. Imports decreased 10% to $4.3 billion.