KARACHI - The economy of the country had embraced another setback as the trade deficit had widened to 20.75 billion dollars during 2007-08 against the initial budgetary estimate of 13 billion dollars. In monetary term the trade deficit in FY08 had edged up by 7.182 billion dollars when matched with 13.563 billion dollars in FY07. In last fiscal the imports showed 30.87 per cent growth and mounted to 39.968 billion dollars worth highest mark. Whereas, in the preceding fiscal 2006-07 the imports had settled at 30.539 billion dollars, thus the imports have marked an increase of 9.429 billion dollars in FY08 over FY07. The exports, however, also reflected a significant growth of 13.23 per cent in last financial year despite a variety of difficulties and increased to 19.222 billion dollars in 2007-08 as against 16.976 billion dollars in preceding fiscal. In rupees term the exports depicted 17.37 per cent increase in FY08, imports marked 35.67 per cent growth while the trade deficit deteriorated by 58.56 per cent. In the month of June 2008 the exports showed a healthy growth of 34 per cent and stood at 2.053 billion dollars against 1.544 billion dollars in June 2007. The imports also reflected a substantial growth of 44 per cent and settled at 4.025 billion dollars, from 2.80 billion dollars in June last year. In June 2008 the trade deficit triggered to 1.971 billion dollars as against 1.252 billion dollars in June last year. In rupees the exports showed 47.54 per cent growth in June this year, imports grew by 59.68 per cent while trade deficit showed 74.66 per cent increase over the same month of last year. Worth noting is that the trade deficit had increased to an unsustainable level in last financial year, eroding the strong base of foreign exchange reserves and triggered the growth of the current account deficit to record level. Sharp increase in the world fuel oil world prices and unprecedented growth in the imports, driven by the procurement of non-essential items have ballooned the overall import bill close to 40 billion dollars in FY08. The previous regime of Shaukat Aziz did not take any serious measures to contain the growth of the trade deficit to an unsustainable level that ultimately widened the current account deficit to the highest level, 12 billion dollars in last fiscal. However, in the current financial year the federal government would have to put in place a strong mechanism to reign in the trade/current account deficit and overall imports bill. Otherwise, the fastest-growing imports bill would take away the entire amount of the foreign exchange reserves in this fiscal, leading the country towards bankruptcy and default. Interest rate may go up Our monitoring desk ADVISER to Prime Minister on Finance Hina Rabbani Khar on Wednesday said interest rate could be further increased to control the rising inflation. In an interview with a foreign news agency, she said some people could misunderstand this step but the government was firm in its commitment not to compromise on price-hike. The central bank had earlier increased discount rate from 10 to 12 per cent to control inflation, she said.According to the finance adviser, the government will give priority to efforts to check price-hike instead of issuing new cheap loans. Pakistan's economy will strengthen and ongoing issues will be resolved within a span of one year, she claimed.