MULTAN - The business community of Southern Punjab has urged upon the government to minimise the trade deficit, which swelled to historic level of $26.6 billion during ten months (July-April) of the current financial year due to the massive increase in the country's imports.

They described it alarming and dangerous for a developing country. Multan Chamber of Commerce & Industry (MCCI) President Khawaja Jalaluddin Roomi said that the government should impose ban on the import of luxurious and unproductive items. Oil-seed crops should be enhanced to cut import of edible oil, he suggested. He said that trade deficit, gap between exports and imports, enhanced by 40.1 percent and reached $26.6 billion during July-April FY2017 from $18.95 billion of the corresponding period of the last year. It was highest ever trade imbalance during ten months of a financial year, he added.

He said the trade deficit had exceeded the level of $20.5 billion set by the government for the ongoing financial year. Pakistan's imports are continuously enhancing as against contraction in exports. Pakistan's current account deficit would enhance due to massive increase in trade deficit and decline in remittances, he added.  The increase in current account deficit could hit the country's foreign exchange reserves, he added.

The latest figures of Pakistan Bureau of Statistics (PBS) showed that imports increased by 19.88 percent to $43.47 billion during July-April of FY2017 from $36.7 billion of the last year. However, the exports tumbled by 2.29 percent to $16.92 billion in ten months of the current fiscal year from $17.31 billion of the same period of the previous year. Therefore, trade deficit was recorded at $26.6 billion during July-April 2016-17.

Meanwhile, relaxation in settlement of loans against exports lauded

Traders, exporters and dealers have lauded the relaxation in settlement of outstanding loans against exports describing it an appropriate step on time.

State Bank of Pakistan (SBP) has relaxed the existing policy regarding settlement of outstanding loans against exports to facilitate exporters and authorised dealers.

 Multan Chamber of Commerce and Industry (MCCI) President Khawaja Jalaluddin Roomi stressed the need for further relaxations in the policy and said that it was a good step that the foreign exchange regulations was allowing the authorised dealers (banks) to use foreign currency deposits for extending foreign currency trade loan facility to exporters and importers. These regulations, however, allow settlement of such loans against exports only through realisation of export proceeds or remittances from abroad.

The SBP has delegated powers to authorised dealers to settle outstanding export loans valuing up to $50,000 (or equivalent in other foreign currencies) themselves through interbank market. The settlement of outstanding loans exceeding the above limit shall, however, require prior approval of the SBP. In cases where export proceeds were not realised for any reason including non-performance of export contracts or circumstances leading to cancellation of export contracts after partial performance etc, such loans remained unsettled. Resultantly, authorised dealers were constrained to retain the above foreign exchange liabilities on their books of accounts.