KARACHI - The federal government officials belonging to economic ministries are terming July and August months as crucial period for the national economy, The Nation learnt on Tuesday. The first two months of the current fiscal would indicate the future path of the economy of the country, a senior government official said. In the months of July and August the federal government would keep an eye on the fluctuations in the foreign exchange reserves, current account/trade deficit, fiscal deficit, imports and exports, he added. If the reserves underwent major corrosion in the first two months of the current fiscal due to the current trend of over 30 per cent growth in imports and abnormal increase in the trade deficit, the federal government would be approached to place drastic curbs on the imports of non-essential items from September or October this year, said the official. The national foreign exchange reserves are expected to remain under tremendous pressure in this fiscal because of trade deficit, record high oil prices and outflow of the capital from Pakistan. He pointed out that in next few months the federal government would not be able to raise additional foreign exchange from the international markets by floating the global bonds, GDRs and through the privatization of public entities as political chaos continued to eclipse the economy. The only and immediate option to pre-empt the rapid decline in the reserves is to put some major restrictions on the imports of the non-essential or unnecessary items after August 2008, he added. Worth noting is that in FY08 the country had sustained a record trade deficit of 20.75 billion dollars against the initial budgetary estimates of 13 billion dollars deficit. This unexpected and the largest-ever size of trade deficit had ballooned the current account deficit to over 12 billion dollars, squeezed the foreign exchange reserves from 16.40 billion dollars in October last year to 11.20 billion dollars till last week. Official sources also hinted at the implementation of energy conservation plan in case the international crude oil prices soared to over 150 dollars a barrel this year. So far the federal and the provincial governments were showing least interest in the energy conservation plan, but some concrete steps would have to be taken in next couple of months if the world oil prices escalated further. In FY08 the fuel oil imports of Pakistan are expected to cross 11 billion dollars historic mark as these imports had already settled above 10 billion dollars (10.07 billion dollars for the first time during July-May 2007-08) as against 6.63 billion dollars imports in the corresponding period of 2006-07. The fuel oil imports bill would become unsustainable in this fiscal in case the prices further increased in the international markets and the government neglected the enforcement of energy saving plan, added the official.