The trade deficit widened to alarming levels despite the Shahbaz Sharif government banning over 800 non-essential luxury items in May.
The trade deficit widened to alarming levels despite the Shahbaz Sharif government banning over 800 non-essential luxury items in May.
Cash-strapped Pakistan’s trade deficit has hit an all-time high of $48.66 billion, up from $30.96 billion a year ago, a significant jump of 57 per cent due to higher-than-expected imports. The report said on Sunday.
The trade deficit widened to alarming levels despite the Shahbaz Sharif government banning over 800 non-essential luxury items in May. dawn The newspaper quoted provisional official figures.
The newspaper said Pakistan’s trade gap widened by more than 32% to $4.84 billion in June from $3.66 billion a year earlier, driven by a nearly double increase in imports compared to exports.
The trade deficit for the outgoing fiscal year 2017-18 has crossed the $37 billion mark, mainly on account of imports related to the China-Pakistan Economic Corridor.
In subsequent years, the trade gap fell to $31.8 billion in 2018-19 and then to $23.2 billion in 2019-20, bouncing back to $30.8 billion in 2020-21 and finally to $48.64 billion in the 2021-22 fiscal year. Done. According to official figures.
Last year’s trade deficit is driven by the biggest ever increase in oil prices and commodities in the international market due to supply chain disruptions caused by the ongoing war in Ukraine.
The trade deficit is widening due to an unprecedented increase in imports due to rising global commodity prices, while exports have stabilized at around $2.5 billion to $2.8 billion a month, mostly for semi-finished products and raw materials. added paper.
Pakistan’s import bill grew 43.45 per cent to $80.51 billion during 2021-22, from $56.12 billion a year ago.
Last week, the Pakistan government drastically hiked petroleum prices to enforce tough pre-conditions set by the International Monetary Fund (IMF) to revive a stalled $6 billion bailout package for the cash-strapped country.
The prices of all petroleum products have increased by around Rs 14-19 per liter since the decision came into effect from Thursday midnight.
This was the fourth hike in petroleum under the current government, which took power in April.
To revive the stalled bailout program, the IMF has put strict preconditions like hike in electricity tariff and levy on petroleum products.
The global lender also asked Pakistan to set up an anti-corruption task force to review all existing laws aimed at curbing corruption in government departments.
Once the conditions are in place, the IMF will submit to its executive board Pakistan’s request for approval of the loan tranche and revival of the program – a process that could take another month.
Pakistan is facing increasing economic challenges with high inflation, dwindling foreign exchange reserves, rising current account deficit and depreciating currency.
On June 22, Pakistan inked an agreement with the IMF to restore the stalled aid package of $6 billion and open doors for funding from other international sources.
The make-or-break deal was reached after the Pakistani team, led by the IMF Staff Mission and Finance Minister Mifta Ismail, had agreed on an understanding on the 2022–23 budget, as officials agreed to generate Rs 43,600 crore more tax and Committed to increase petroleum. According to the paper gradually levy up to Rs 50 per liter.
An expanded fund facilitation package of $6 billion for a period of 39 months was agreed in July 2019. So far only half of the promised money has been returned.
The revival of the facility will immediately provide access to the $1 billion that Pakistan desperately needs to cushion its dwindling foreign exchange reserves.