The latest State Bank figures show that the country's trade deficit soared to all- time high of nearly $ 34 billion in the first 11 months of the current fiscal year, posinga serious challenge for the government to curtail rising current account deficit. The deficit widened almost 13.3 per cent during the JulyMay period of the current fiscal year. It rose to $ 3.76bn in May, an 8.6pc year- on- year increase. The rising trade deficit had been a constant headache for the PML- N government during its fiveyear term. The last fiscal year saw the trade deficit rise to an alltime high of $ 32.58bn, representing year- on- year growth of 37pc. When the PML- N came to power in 2013, the country's annual trade deficit was $ 20.44bn. It has been continuously on the rise since then.
The import bill recorded a growth of 14pc to $55.3bn in JulyMay period of 2017-18 from $48.54bn over the corresponding period of last year. On a monthly basis, the import bill recorded a growth of 15pc to $5.9bn from $5.09bn over the preceding month.According to the commerce ministry, the imports for the month showed an increase of 15pc mainly due to persistently high oil price and increased volumes of imports of fuels and machinery to overcome energy deficit.The overall increase in imports for the eleven months period remained at 14pc as compared to the previous fiscal year. The import bill is rising due to an increase in the arrival of capital goods, petroleum products and food products.
On the other hand, exports have continued to show welcome growth that began early in 2017. The growth pattern in exports has been seen since then with few exceptions. Exports continue to post the figures above $2bn for the third consecutive month since March 2018. The month of May witnessed a growth of 32pc year-on-year compared to the same month last year.In dollar terms, the highest ever month-on-month growth was recorded as export proceeds went up to $2.14bn from $1.62bn in May 2017, which shows the stability at higher levels being reflected in the export figures.In terms of annual export growth, the figures have improved from 14pc in July-April to 15pc in July-May. The overall exports in the first eleven months have already reached $21.32bn, which is almost $1bn higher than the annual figures of 2016-17.
It can be safely projected that the exports for the current year will surpass $23.4bn, bringing in an additional foreign exchange of around $3bn.The merchandise exports for the month of May earned Rs247.5bn as compared to Rs169.7bn earned in May last year. It shows additional revenues of around Rs80bn for exporters in the May. Hence in rupee terms the growth is a whopping 46pc.The rise in exports is the outcome of improvement in energy supply, partially releasing of refunds and cash subsidies under the Prime Minister Export Package. The government had also imposed additional regulatory duties on luxury items besides restrictions on imports of certain goods to curtail rising imports.
Rising exports should not create a sense of complacency. Pakistan's exports are among the lowest as compared to countries in similar economic conditions. We should facilitate our exporters in all possible ways. Since textiles are number one in the list of foreign sales we should pay special attention to the problems of cotton growing farmers ( with the cotton sector accounting for the bulk of our exports). We should alsoreview the industrial policy which continues to remain hostage to delays in tax refunds as well as higher costs of production due to higher input costs, especially energy.