ISLAMABAD – The government has claimed that Pakistan’s non-energy import bill has shrunk by 12.5 per cent in October owing to measures taken by the government and State Bank of Pakistan (SBP) to curb the rising imports.
“Pakistan’s non-energy import bill shrank by 12.5% in Oct 2021, i.e. by $624 million, compared to Sep 2021,” said Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood on twitter. He said the month-on-month decline comes after positive growth in previous two months (September and August), which is a testament to actions by the government and SBP to curb imports, he added.
The SBP in last month (October) had imposed 100 percent cash margin on letters of credit (LC) for 114 goods with immediate effect to discourage unnecessary imports. The measure will help discourage imports of these items and thus support the balance-of-payments. However, the government now claims that it helped in controlling Pakistan’s non-energy import bill.
Pakistan’s imports have gone up by 65 percent to $24.994 billion in 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.
Meanwhile, Islamabad Chamber of Commerce and Industry (ICCI) has called for urgent measures to overcome rising trade deficit. Muhammad Shakeel Munir, President, ICCI expressed great concerns over the rising trade deficit of the country that has posted a rise of over 103 percent during the first four months of the current fiscal year. It called upon the government to take urgent remedial measures to curb this dangerous trend as the increasing trade deficit would put more pressure on exchange rate and cause further depreciation in the value of rupee unleashing a new wave of high inflation in the country.
Shakeel Munir said that the trade deficit of Pakistan had reached an all-time high of over $37 billion in financial year 2018 creating multiple problems for the economy and the current government had brought it down with great efforts to around USD 23 billion by 2020. However, the trade deficit was again on the rise, which was not a good sign for the economy. He said it was unfortunate that being an agricultural country, Pakistan was importing wheat, sugar, pulses and many other food items, which also contributed to the rising trade deficit. He emphasized that the government should extend full support to the private sector in promoting import substitutions in the country in order to reduce dependence on imports and improve exports.
ICCI president said that in an environment of rising trade deficit, the growth of the economy would remain uncertain amid fears of further deterioration in the fiscal and current account imbalances and it was high time that the government should take urgent measures to reverse this unhealthy trend. He said that to sustain the strong economic growth, the government should increase private investment and focus on exports promotion. He further said that the government should ensure availability of long-term financing to the private sector to help expand export capacity of firms that would help in promoting exports.
Jamshaid Akhtar Sheikh, Senior Vice President ICCI, said that the value of Pakistani rupee has tumbled to over Rs.170 against a dollar, which showed that our currency has lost its value at an alarming rate. He said it would put more pressure on the country’s capacity to finance its foreign debt obligations going forward. He said that eroding the value of rupee was also disturbing all future plans of the business community as they needed a stable exchange rate for long-term business and investment planning. He urged that the government should take urgent measures to stabilize the value of the rupee.
Muhammad Faheem Khan, Vice President ICCI said that Pakistani industries were importing almost 70 percent of raw material for manufacturing activities and decreasing value of rupee would further push up their production cost making our exports more uncompetitive in the international market. He emphasized that the government should support the private sector in setting up raw material producing industries in the country to reduce dependence on their imports that would help in reducing trade deficit as well.
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