Pakistan’s trade deficit widened to $20.5 billion in the last fiscal year, far more than the official projection but lower than the preceding year, as the country missed its export target for yet another year.
Figures released by the Pakistan Bureau of Statistics (PBS) on Friday showed that the country exported $24.5 billion worth of goods compared to imports valued at $45 billion, leaving a gap of $20.5 billion in 2012-13 that ended on June 30.
Compared to the preceding year, the trade gap contracted by 4.1%, but it was far higher than the projection of $17.2 billion, suggesting the fixing of an unrealistic target by the previous government.
Against the target of $25.2 billion, exports reached $24.5 billion at the close of fiscal year 2012-13, up 3.8% over $23.6 billion worth of shipments a year earlier, according to the PBS. The import bill remained at almost preceding year’s level and stood at $44.95 billion. The government had projected a $45.7 billion import bill in its annual plan.
The missing of the trade deficit target by a wide margin will widen the current account deficit – the gap between external receipts and payments.
Higher-than-projected current account deficit will lead to a drawdown on foreign currency reserves held by the State Bank of Pakistan, currently standing at just $5.5 billion. By taking into account the central bank’s short-term liabilities of over $3 billion, actual reserves are roughly $2.5 billion, not enough to finance one-month import bill.
For the new fiscal year, the government has projected a trade deficit of $16.7 billion. It aims to take exports to $26.2 billion while the import bill could reach $47.4 billion.
Month-on-month trade figures showed that imports shrank about one-tenth and stood at $3.9 billion in June over May, showing signs of slowdown in economic activities. In June, exports slightly picked up by 1% to $2.2 billion over the previous month.
The trade deficit in the month contracted by one-fifth and stood at $1.74 billion on the back of slowing imports, according to the PBS.
The monthly trend was also reflected in year-on-year figures as the trade gap in June this year narrowed 5.4% compared to the corresponding month in the previous year and stood at $1.74 billion.
Exports grew 2.8% to $2.2 billion this June compared to last year while imports dropped almost 1% to $3.9 billion.
Published in The Express Tribune, July 13th, 2013.
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