The trade conundrum

Private sector needs to come up with innovative means to increase exports, as we cannot rely on govt policy alone

Pakistan’s trade deficit widened by almost 50 per cent, shooting to $8.8 billion during the first four months (July-October) of the ongoing fiscal year, compared with $5.9 billion during the corresponding period of the previous year. The trade deficit widened after Pakistan’s exports contracted by 6.9 per cent, while the import bill swelled by 16.1 per cent over the corresponding four-month period of the previous year. Data released shows that exports clocked in at $7.98 billion against imports worth $16.79 billion from July to October this year.

The worrying issue is that exports experienced a dip despite Pakistan being granted the GSP Plus status in January this year, meaning the country could avail duty-free access to the European Union (EU) markets. However, the textile sector — the biggest beneficiary of the EU’s special incentive — has been unable to fully utilise the advantages that the status gives. If one asked those at the helm of the sector the reason behind this, they would point to the shortage and/or suspension of gas supply to industries. While one could concede that our industries do face load-shedding issues, it is a reality that the rest of the country does too. Power crisis, along with the security situation, is the biggest hindrance to the country’s economic growth. But, to quietly accept that the country’s exports will continue to suffer on the back of load-shedding, amounts to just caving in in the face of a difficult situation. We have to be better than that and look for alternative solutions to the problems we face. The IMF has put forth a target for Pakistan: to increase the central bank’s reserves equivalent to three months of imports. At the current rate of imports, that figure is over $12.5 billion — the State Bank of Pakistan currently has around $8.5 billion in the kitty. Increasing the import bill and not doing enough to increase exports is what the country is doing right now. Maybe, for a change, the private sector can step in and take up the challenge at hand. We cannot rely on government policy alone to increase our exports. The private sector also needs to come up with innovative means to do so.

Published in The Express Tribune, November 14^th, 2014.

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