ISLAMABAD - Pakistan’s trade deficit widened by 36.32 percent to highest ever level of $32.58 billion during last fiscal year (FY17) because of the record increase in imports and decline in exports. Trade deficit was recorded at $23.9 billion during the previous fiscal year (FY16).

The government had set the target to keep trade deficit at $20.5 billion for FY2017. However, the deficit surged by $12 billion due to massive growth in imports and decline in exports.

The latest data of Pakistan Bureau of Statistics (PBS) showed that country’s imports were recorded at historic level of $53.02 billion during the FY17 as against $44.69 billion of the FY16, showing an increase of 18.67 percent. Pakistan’s imports have gone beyond $50 billion for the first time in country’s history. However, the exports registered a decline of 1.63 percent and were recorded at $20.45 billion during previous financial year as compared to $20.79 billion of the preceding year.

The strategic trade policy framework (STPF), announced in March last year, had failed to enhance country’s exports. The government was interested in implementing the STPF, as most initiatives of the policy remain only on paper. The framework aimed at expanding exports to $35 billion by 2018, improving export competitiveness, shifting the economy from factor-driven to innovation-driven and increasing the share in regional trade.

However, the government has now decided to revise the STPF. The Ministry of Commerce would start consultations with relevant stakeholders before revising the trade policy.

Owing to the swelling trade deficit, the balance of payments of the country is now projected to worsen to levels never anticipated by the finance ministry. The country’s current account deficit would touch $8.3 billion (2.7 percent of the GDP) during previous fiscal year due to the higher trade deficit. The PML-N government has also missed the exports target for the fourth consecutive year despite the fact that Pakistan enjoys duty-free status for its exports to the European Union. Exports are not picking up despite offering two incentive packages to the exporters. The government in January this year announced an incentives package worth Rs180 billion to boost the country’s tumbling exports. However, it had failed to enhance exports.

A parliamentary committee has already taken notice of increase in trade deficit of the country, which jumped to $32.56 billion during the last financial year 2016-17. The Senate Standing Committee on Commerce had asked the officials of the ministry of commerce to give briefing on deteriorating balance of trade of the country on July 13. The committee would meet under the chair of its chairman Senator Shibli Faraz.

The PBS data showed that Pakistan’s exports have enhanced by 16.16 percent to $1.91 billion in June 2017 from $1.65 billion of June 2016. However, the imports recorded a decline of 10.96 percent and reached $4.5 billion in June 2017 from $5.092 billion in the same period of the last year. Therefore, the trade deficit was recorded at $2.62 billion in June 2017 as against $3.47 billion of June 2016, showing a reduction of 24.33 percent.