No measures to curb the surge in imports

ISLAMABAD:

On Thursday, the government made no policy decisions to curb the surge in imports while hoping the record import bill would gradually decline due to stable global commodity prices, as new statistics revealed the country’s trade deficit. highest ever five-month record of $ 20.6 billion.

Financial adviser Shaukat Tarin hastily called a meeting to review the trade balance situation. But like many other such sessions, the meeting ended on a satisfactory note as world commodity prices had started to decline.

High commodity prices were responsible for Pakistan’s record $ 7.85 billion in imports in November 2021, according to economic officials.

Pakistan’s Bureau of Statistics (PBS) on Thursday released data showing the trade deficit widened to $ 20.6 billion in the first five months (July-November) of the current fiscal year due to ‘a sharp increase in imports which exceeded the increase in exports.

The deficit was $ 10.9 billion, or 112%, higher than the comparative period of the previous fiscal year, he added.

The widening trade deficit suggests that by June next year it will be well above the government’s target of $ 28.4 billion. The five-month deficit was already 72.5% of the annual target.

Between July and November FY22, exports increased 26.7 percent and stood at nearly $ 12.4 billion from $ 9.7 billion in the same period a year earlier, according to the national data collection agency.

In absolute terms, exports increased by $ 2.6 billion in the first five months of FY22.

During the five-month period, exports equaled 47% of the annual target of $ 26.3 billion. However, the Commerce Ministry predicts that exports will reach $ 31 billion in the full year.

Read Exports hit record $ 2.9 billion

Imports in fiscal year July-November 22 increased 69 percent to nearly $ 33 billion. In absolute terms, imports increased by $ 13.5 billion, according to the PBS.

The central bank introduced a cash margin requirement for more imported products, in addition to reducing consumer financing to ease the pressure from imports. However, these measures failed to contain imports which reached a new high.

The federal government has yet to implement new administrative measures to complement the central bank’s efforts.

November data

Imports soared to $ 7.84 billion in November, an 83% increase, or $ 3.6 billion, over a year ago, according to the PBS. It was the highest import figure on record, which was $ 1.5 billion more than the Commerce Ministry estimate, undermining projections for the foreign sector.

Merchandise exports remained at $ 2.9 billion in November 2021, according to the PBS. They were 33% higher, or $ 713 million, from the same month a year earlier.

As a result, the trade deficit widened 134% year-on-year to $ 5 billion in November 2021.

The internal meeting of financial advisers on the growing trade deficit ended on a satisfactory note. “He was informed that there will be less importation of food, fuel oil and vaccines in the coming months, which will significantly reduce the pressure on commercial invoices in the second half of the current fiscal year. “said a statement released by the Ministry of Finance. .

Read more The ministry closely monitors imports

The ministry said that “the pressure on the import bill was mainly due to the high world prices of raw materials, in particular energy, steel and industrial raw materials”.

The forum also noted that the high imports of vaccines contributed significantly to the increase in the import bill, he added.

The ministry said Tarin advised authorities to take effective policy measures to curb unnecessary imports of luxury items.

However, the sources said no measures were discussed at the meeting to curb imports. The meeting noted that world prices for crude oil and coal had started to decline, which would lower the import bill.

Sources said the finance and trade ministries were of the opinion that there had been no major increase in the amount of imported goods and that the import bill of $ 7.85 billion was due to rising commodity prices.

The Petroleum Secretary informed the meeting that the country will no longer import large shipments of heating oil, which will help reduce the trade deficit.

The Commerce Ministry said imports of cotton, sugar, crude oil, liquefied natural gas (LNG) and Covid-19 vaccines increased significantly in the first five months of fiscal year 22. Imports of raw materials and capital goods also increased.

Two days ago, the financial adviser decided to ban the importation of cars for seven months, which is about $ 30 million per month. But that will translate to savings of nearly $ 210 million in seven months, which equates to just 0.6% of the five-month import bill.

The central bank’s foreign exchange reserves have steadily declined and fell further to $ 16 billion in the week ending November 26, 2021, the SBP reported. There was a $ 244 million reduction in reserves in one week.

Posted in The Express Tribune, December 3e, 2021.

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