ISLAMABAD – Advisor to the Prime Minister on Commerce and Investment, Abdul Razak Dawood on Friday directed the officials of ministry of commerce to work closely with the State Bank of Pakistan (SBP) for curbing import of non-essential items.
He chaired a meeting to discuss the imports of goods during the current Financial Year and their impact on trade and current account deficits. Pakistan’s imports have gone up by 65 percent to $24.994 billion in first months (July to October) period of FY2020-21 from $15.193 billion in the same period of the previous year. Meanwhile, the country’s exports were recorded at $9.468 billion in July to October period of the year 2020-21 as compared to $7.576 billion in corresponding period of the previous year, showing growth of 25 percent. The country’s trade imbalance was recorded at $15.525 billion in July to October period of the year 2020-21 as compared to $7.617 billion in corresponding period of the previous year, showing massive growth of 103.8 percent.
Dawood was informed that the Ministry of Commerce (MOC) is keeping a close eye on imports. He was informed that the MOC and the State Bank of Pakistan (SBP) are working closely together to analyse the imports so that timely interventions can be made. He was informed that during the period Jul-Oct 2021, the imports increased by 64% to USD 24.99 million as compared to USD 15.19 billion during Jul-Oct 2020. In absolute terms, the net increase in imports over this period is USD 9.801 billion.
Upon detailed analysis it has been observed that around 40% of this increase is in the investment-driven imports namely, raw material and intermediate goods. He was briefed that the increase in the imports of raw material and intermediate goods was a good thing as it indicates that the industrial activity in the country was picking up. The increase in the import of capital goods, including machinery, was indicative of industrial expansion, upgradation, and setting up of new industries. In the long run, these imports are very important for the economic growth and job creation.
When asked about the remaining 60% of imports, he was informed that these mainly consist of energy (petroleum, coal & gas) 34%, vaccines 11%, food (8%), consumer goods (2%) and all others (5%). These imports were the purview of the concerned ministries and most of these are of inelastic nature.
He was also briefed on the details of the imports categories of which consumer goods are USD 239 million, food USD 823 million, capital goods USD 1,620 million, raw material & intermediates USD 2,209 million, petroleum, coal & gas USD 3,364 million, vaccines USD 1,068 million and all others USD 478 million.
The MOC also briefed Dawood about the effects of interventions made by the MOC and SBP. He was informed that Pakistan’s non-energy import bill has decreased by 12.5% in October 2021, a decrease of USD 624 million, compared to September 2021.
He was further informed that in terms of month-on-month growth, the non-energy imports have been on the decline during the first four months of this financial year. This is a welcome trend which bodes well for the trade deficit and the current account deficit.
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