Finance adviser Shaukat Tarin presides over meeting to review balance of trade. Photo courtesy PID
Meeting to review balance of trade position informed imports of food items, furnace oil, and vaccines will soon reduce and result in lower trade bill
Adviser to the P.M. on Finance Shaukat Tarin on Thursday chaired a meeting to review Pakistan’s balance of trade position after economic data for November 2021 revealed a record-breaking $7.85 billion worth of imports against $2.884 billion exports.
According to a statement issued by the Finance Division, the meeting—attended by several members of the federal cabinet—reviewed and discussed the import bill of July-November 2021. “It was informed that pressure on the import bill was mainly due to global high commodity prices, especially energy, steel, and industrial raw materials,” it added.
Data issued by the Pakistan Bureau of Statistics (PBS) shows that in the five months under consideration, the country’s exports netted $12.344 billion, a 26.68% year-on-year growth. During the same period, imports jumped to $32.934 billion against $19.468 last year, a growth of 69.17%. The country’s trade deficit in the July-November period stands at $20.6 billion, the highest-ever reported.
The government, in the budget for fiscal year 2021-22, had set a target of $28.4 billion for the annual trade deficit. With the value already crossing $20 billion in just five months, it appears unlikely that authorities would be able to achieve their target. However, the Ministry of Commerce believes that the increase in exports would also allow it to exceed its annual target of $26.3 billion.
According to the Finance Division’s statement, part of the reason for the hefty import bill is the “high import of [coronavirus] vaccines.” It also claimed that the meeting had been informed that there would be less import of food items, furnace oil, and vaccines in the coming months, which would reduce the pressure on the trade bill in the second half of the ongoing fiscal.
Last month, the State Bank of Pakistan implemented a cash margin requirement for a large swathe of imported products, as well as curtailing consumer financing, to reduce imports. However, this has thus far failed to produce any significant impact on the import bill.
“At the conclusion [of the meeting], Adviser to the P.M. on Finance and Revenue advised the concerned authorities to take effective policy measures to reduce unnecessary imports of luxury items,” the statement added. However, there was no information on what measures, if any, the government is planning to undertake to curb imports, especially food items and furnace oil.
The government is set to introduce a “mini-budget” within this month as part of the “prior actions” required by the International Monetary Fund (IMF) to revive a stalled $6 billion loan facility. Designed to curb growth, observers fear it would lead to greater pressure on the rupee, potentially maintaining the high value of the import bill.