ISLAMABAD: Pakistan’s trade balance is worsening at an accelerated pace, as it rose sharply to $5.11 billion in November 2021 against $1.94 billion in the same month of the last year 2020, witnessing a surge by 163 percent.
It shows an alarming trend, as it will mount pressures on the current account deficit (CAD) in the months ahead and without ensuring dollar inflows mainly through debt-creating instruments. With the blessings of the IMF, the pressure on the exchange rate might further escalate in weeks and months ahead.
There are three bad news on the economic front simultaneously, as these developments even shocked some federal cabinet ministers. First of all, the Consumer Price Index (CPI) went high as one federal minister told this scribe in background discussions that he was expecting CPI based inflation might be crossing 10 percent mark for November 2021 against 9.2 percent for October 2021. He had even told the governor State Bank of Pakistan that the CPI might go beyond 10 percent mark but it went up to 11.53 percent for November 2021.
Secondly, one top economic manager said that the trade balance was showing worsening situation in the wake of rising imports but he had not thought that the import bill would touch $8 billion mark on monthly basis in November 2021 against exports of $2.9 billion, so the trade deficit went up by $5.11 billion just in one month.
The overall trade deficit has risen sharply and stood at $20.7 billion in the first five months (July-November) period of the current fiscal year as the exports fetched $12.37 billion but imports went up to $33.11 billion. The trade deficit stood at $9.54 billion in the same five months of the last fiscal year. The trade deficit in five months of FY2022 went up by 117 percent.
The trade deficit stood at $3.87 billion in October 2021 as exports stood at $2.7 billion and imports $6.33 billion.
This prevailing trend shows that the trade gap was widening on monthly basis and now it might have rung alarm bells among the dwellers of Q Block (Ministry of Finance).
Prime Minister’s Adviser on Finance Shaukat Tarin chaired a meeting in the Ministry of Finance to review the rising import bill and directed the authorities concerned to take steps to curtail the import of luxury items.
Top officials of the Finance Ministry shared the break-up data of imports, which shows that the import of food items stood at $911 million, energy, including POL products and RLNG $2.4 billion, raw material $2.2 billion, machinery $1.14 billion and Covid-19 vaccine $621 million in November 2021.
There is not much space left with the government to curtail imports, however, the Finance Ministry is continuously contemplating upon options to slap ban on import of cars and jack up the Regulatory Duty (RDs) and Additional Customs Duty on 10 to 12 other luxury items in order to reduce the import bill. Third bad news is continuous crash of stock market and depreciating exchange rate as it nosedived.