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Challenge of rising trade deficit

Challenge of rising trade deficit

Exports are continuously falling since the current government took over the office three and half years ago, but it could not do anything better than lip service to control the situation. The ground reality is that, falling exports and rising trade deficit could be a matter of concern for the nation, but it is not necessarily a matter of concern for the government. Reports suggest that the country is facing the grave challenge of trade deficit which increased to $17.428 billion or 29 percent year-on-year in the first seven months of the current fiscal year. The trade deficit recorded at $2.957billion in January as compared to $1.688billion a year ago. This shows an increase of 75 percent and the government is unable to change the gear or change the driver to put the economy in the right direction. According to the Pakistan Bureau of Statistics, the falling exports as well as falling volume of remittances are blamed for the rising current account deficit during the current fiscal year. On another note, the overall import bill increased to over $29 billion in seven months or 13.7 percent year-on-year. The government claims the import bill has increased due to import of machinery for several development projects in the country.

Pakistan could only export goods worth $11.685 billion in seven months of the current fiscal year. The goods exports during the period were mainly from textile and garment sector, which also showed a marginal increase of 0.74 percent. Experts believe a raise in the garment exports is made possible due to the GSP plus status given to Pakistan by the European Union. The government unveiled a strategic trade policy last year, setting the export target at $35 billion by 2018, but ironically nothing has been done so far on the ground. Meanwhile, the prime minister has announced a package of Rs180billion for textile, sports, surgical, leather and carpets sectors. The Ministry of Commerce is still awaiting for the funds to implement the trade policy to arrest the declining exports. The government should encourage the export of value added goods and discourage the export of fruits, vegetables, rice and other edibles. It is not fair to deprive the nation of best quality edibles in a bid to show better export performance. It is a general experience that best quality fruit and other commodities of Pakistani origin are available in foreign countries at cheap prices whereas Pakistan itself is the best market for quality products.