ISLAMABAD - Pakistan’s trade deficit has slightly narrowed by 1.61 percent in first quarter (July to September) of the current fiscal year that may eases pressure on the tumbling foreign exchange reserves of the country.

The country’s trade deficit has recorded at $8.9 billion during July-September period of the ongoing financial year as against $9.01 billion of corresponding period of previous year, showing a minor decline of 1.61 percent. Trade deficit has controlled due to the unexpected increase in exports as against the imports, according to the latest data of Pakistan Bureau of Statistics (PBS).

Pakistan’s exports have gone up by 4.56 percent to $5.39 billion during first quarter of the current fiscal year.

On the other side, the country’s imports have grown by only 0.63 percent to $14.26 billion during July-September period of the year 2018-19. Therefore, the trade deficit has recorded at $8.9 billion in first three months of the ongoing financial year.

The reduction in soaring trade deficit of the country may eases pressure on the foreign exchange reserves, which are sharply declining due to heavy repayment on previous loans. The reserves had fallen to $8.4 billion last week, which are enough to cover only one and half months’ imports bill.

The State Bank of Pakistan (SBP)’s reserves had decreased by $627 million in just one week to $8.409 billion due to payments on account of external debt servicing. The government had recently decided to approach International Monetary Fund (IMF) to take new loan programme to build its declining foreign exchange reserves.

The government has apparently allowed the rupee depreciation against the US dollar. The economic experts believed that recent rupee depreciation would help in increasing the exports and reducing the imports of the country. In interbank, the dollar value has increased to over Rs134 as against Rs124.35 when the market closed on Monday. However, the government’s decision of going for new IMF loan has resulted in increase in dollar vale by Rs10 in two days.

Meanwhile, the PTI led government had introduced measures in mini budget to control the trade deficit of the country. The government had doubled the Federal Excise Duty (FED) on cars of 1800cc engine capacity or more from 10 percent to 20 percent.

Similarly, the government had also decided to increase the duty on several imported luxury products. The duty had increased on expensive phones. The government had imposed 10 percent Regulatory Duty on imported mobile phones costing more than Rs15000. Similarly, the government had imposed 10 percent RD on imported footwear, furniture, paper, fruits, vegetables, fish and its products and cosmetic products.

Annual Data

Pakistan’s exports have enhanced by 3.55 percent to $1.73 billion in September 2018 from $1.67 billion of September 2017. Meanwhile, the imports recorded a decline of 0.18 percent and reached $4.43 billion in September 2018 from $4.44 billion in the same period of the last year. Therefore, the trade deficit was recorded at $2.7 billion in September 2018 as against $2.77 billion of September 2017, showing a decline of 2.43 percent.

Monthly results

On a month-on-month basis, exports in September increased by 3.55 percent to $1.73 billion from $1.67 billion of July 2018. However, imports in September 2018 have decreased by 0.18 percent to $4.43 billion from $4.84 billion of August. The month-on-month trade deficit this time was down by 2.43 percent and recorded at $2.7 billion during September 2018.