ISLAMABAD    -    The incumbent PTI government is struggling to achieve its own exports target of $27 billion during ongoing fiscal year despite massively devaluing the currency.

The government had decided to jack up the exports of the country to $27 billion from $23.4 billion in the ongoing fiscal 2018-19. However, the nine months data released by Pakistan Bureau of Statistics (PBS) suggested that government would miss the exports target by wide margin. The country’s exports were recorded at $17 billion during nine months (July to March) of the current fiscal year, which is almost same as it was in the corresponding period last year.

In an alarming situation, the exports had gone down by 11.13 percent in March 2019 over the previous year. Exports had fallen to $1.98 billion in March 2019 as compared to $2.23 billion of the same period last year. The government’s top economic mangers had pinned hope that exports would increase in March 2019 due to the impact of rupee depreciation.

Advisor to Prime Minister on Commerce and Investment Abdul Razak Dawood has expressed dissatisfaction at negative growth in exports in March 2019. “There is bad news that exports had gone down by 11 percent in March. However, the imports had reduced, which is good news,” said Dawood while talking to media at Board of Investment on Wednesday. He hoped that exports could increase if Pakistan fully utilized China’s market access in sugar, rice and yarn amounting to $1 billion.

The State Bank of Pakistan in consultation with Ministry of Finance had allowed the currency to devalue by 35 percent since November 2017 in a bid to enhance the country’s tumbling exports.  The incumbent government had also reduced the gas and power prices for the export oriented sectors. The Pakistan Muslim League-Nawaz (PML-N) government had given an Rs180-billion package to the exporters. However, the country’s exports are still not increasing, which is matter of serious concern for the economic managers of the country.

According to the PBS, Pakistani goods exports had increased by only 0.11 percent to $17.08 billion, while imports had went down by 7.96 percent to $40.75 billion during the nine-month period (July-March 2018/19) over the same period of the last financial year. Over the same period of last financial year, the deficit was $27.21 billion which has now come down to $23.67 billion. This depicts 13.02 percent or ($3.54 billion) reduction in the deficit.

The government in medium term economic framework explained the reasons for reduction in exports over the past few years. Several policies, institutional and structural factors have consistently led to export growth deceleration.

The major policy distortion pertains to the exchange rate. Since 2000, Pakistani rupee has remained overvalued for almost 90% of the entire duration, thus creating an unfavorable macroeconomic environment for the export sector and hence industrialization. The resulting loss of competitiveness is striking. Exports have failed to make a transition from low technology to high technology products as about 70 percent of country’s export continues to be low technology products. In addition, the country has failed to diversify its export commodities and export markets.

Pakistan’s loss of competitiveness is evident from the fact that Pakistan’s export to GDP ratio was only 8.2 percent in 2017, whereas the same ratio in the same year in India was 19.0 percent and in Bangladesh, 15.0 percent.