ISLAMABAD - Pakistan’s trade deficit has widened by 34.33 percent during first eight months (July-February) of the ongoing financial year, 2016-17, due to the massive increase in imports and decline in exports.
The country's trade imbalance has been recorded at $20.2 billion during July-February of the year 2016-17 as against $15.04 billion in the corresponding period of the last year, according to the latest data of Pakistan Bureau of Statistics (PBS).
The country’s imports are continuously increasing and exports are declining, which has widened the trade deficit, says the data.
Pakistan's exports have come down by 3.9 percent to $13.32 billion during July-February period of the current fiscal year from $13.86 billion of the preceding year.
However, imports have shown a massive increase of 15.99 percent and reached $33.52 billion during July-February of this fiscal year; from $28.9 billion during the same period in the previous year.
The government has failed to control the trade deficit at the target level.
For the current fiscal year 2016-17, trade deficit had been estimated at $20.5 billion, as the exports had been projected to grow to $24.75 billion, and it had also been estimated that the imports will surge to $45.2 billion by the end of this fiscal year. However, the imports are continuously enhancing during the present financial year.
The State Bank of Pakistan (SBP), in an effort to arrest the soaring imports, has imposed 100 percent cash margin on the import of a number of items to bridge an alarmingly high trade deficit.
The items include motor vehicles, mobile phones, cigarettes, jewellery, cosmetics, electrical and home appliances, arms and ammunitions.
Pressure is mounting ever since the sharp decline in foreign exchange reserves is being noticed during the last few months.
According to the PBS data, the country's exports came down by 7.98 percent to $1.64 billion in February 2017 as compared to $1.78 billion in January 2017.
Meanwhile, the country's imports have recorded a decline of 5.91 percent, as it imported goods worth $4.45 billion in February 2017 against $4.72 billion in the preceding month (January).
Therefore, the trade deficit was registered at $2.81 billion during February 2017 against $2.94 billion in the corresponding month of the last year, showing an increase of 4.65 percent.
The government hopes that exports would enhance in the months to come, as the Prime Minister Nawaz Sharif has announced an incentive package of Rs180 billion to boost the country's declining exports.
Under the package, duty drawback for garments would be 7 percent, textile made-ups 6 percent, processed fabric 5 percent, yarn and grey fabric 4 percent, sports goods, leather and footwear 7 percent and carpets and tents 5 percent.
Similarly, the government has abolished import duty on cotton and also abolished customs duty on man-made fibre other than polyester.
Sales tax on the import of textile machinery has also been eliminated.