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Trade deficit in Pakistan contracts 11% to $21.5b in eight months

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Staff Writer |
Asia   That is primarily because of a steep decline in imports

Pakistan’s trade deficit contracted over 11% to $21.5 billion in first eight months of the current fiscal year.

That is primarily because of a steep decline in imports but the growth in exports remained sluggish, underscoring the need for a review of the policy of subsidising exporters.

Exports, both on month-on-month and year-on-year basis, fell in February 2019, which put a question mark over the claims made by the Ministry of Commerce while giving huge fiscal incentives to the exporters, especially the textile sector.

Despite the fiscal incentives and currency depreciation, the exports stood below $2 billion in February.

Trade deficit that stood at $24.2 billion in July-February FY18 shrank 11% to $21.5 billion in the corresponding period of current fiscal year 2018-19, the Pakistan Bureau of Statistics (PBS) reported on Tuesday.

In absolute terms, there was a reduction of $2.7 billion in the trade deficit and $2.4 billion came from the import side.

Overall imports during July-February FY19 dropped 6.13% to $36.6 billion.

Exports during the first eight months of the current fiscal year amounted to only $15.1 billion, higher by just 1.85% or $275 million.

This came despite the fact that the central bank, in consultation with the finance ministry, let the currency depreciate by 32.7% since January last year.

The Pakistan Muslim League-Nawaz (PML-N) government had given a Rs180-billion package to the exporters.

The Pakistan Tehreek-e-Insaf (PTI) government has also provided over Rs30-billion package in shape of lower gas and electricity prices.

Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood had claimed that the PTI government would achieve a record $27 billion worth of export by the end of current fiscal year.

But the quantum of exports in the first eight months was equal to only 55% of the target.

Dawood vowed to reach the $27-billion mark on the back of $1 billion worth of market access from China for export of tea and rice and reduction in cost of doing business for the exporters.

Last month, the commerce adviser voiced hope that exports would soon start picking up once all the policy and administrative measures fully kicked in.

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