According to the Pakistan Bureau of Statistics (PBS), the country’s trade deficit contracted by a significant 35 percent in the first quarter of the financial year 2020. This is a great leap for the government due to the constant stream of criticism against the lack of a coherent economic policy. This contraction has resulted due to the management of imports, which decreased significantly by 20.59 percent during the first half of the fiscal year. The trade deficit now stands at $5.727 billion during the quarter ending September 30 as compared to an $8.791bn deficit during the same period last year.

The policy to hold off imports is working in favour of the government and they need to build on it in order to facilitate the industries and businesses in Pakistan. At this point, due to the tariff war between China and the United States of America (USA), several investors are looking towards cheaper economies, one of which is Pakistan. The government should facilitate these potential investors in order to retain the boost in the economy along with developing industrial hubs that will allow Pakistan to eventually turn towards self-sufficiency. With the ban on imports in place, the government has to make the policy more holistic by giving incentives to domestic investors to invest in local production instead of relying on foreign economies.

At the same time, the government should also look towards the drawbacks of such policies, one of which is the rampant increase in smuggling. This agitates the importer in Pakistan because smugglers then take over the local trade. This has been happening for small scale and large scale businesses in Pakistan post the no import policy. A task force should be formed to stop smuggling and penalise those who indulge in such criminal activities in order to ensure that businesses work on white money. With the pressures from the Financial Action Task Force (FATF) as well, there is a need to streamline revenue channels and that would include eradication of all illegal monetary activities in the country.

Another aspect of this contraction in trade deficit is increase in exports. The federal government now wants to invest in and incentivise exports. For this purpose, the government needs to create a business-friendly environment through its policies - something they have not been able to achieve since day one. Individuals with domestic market acumen need to be brought on board to help reform the Pakistani market.