The country has been facing trade deficit for a long time, but halfhearted efforts on the part of the policy makers never worked well and the problem is persistently haunting the national economy. According to a report issued by the State Bank of Pakistan, the country’s trade deficit increased to $17 billion in 2014-15 from $16.59 billion in 2013-14 despite the fact that remittances sent by overseas Pakistanis reached $18.54 billion mark, an all-time high, with double-digit growth of 16.5 percent as compared to $15.84 billion the country received during the last financial year. However, looking from another side, the lower oil prices in the international market pushed the country’s current account deficit to fall by 27 percent. The experts believe the deficit is still high in view of record $18.54 billion remittances and up to 50 percent fall in the oil prices during the year under review. Keeping in view the fragile economy of the country, the deficit is significantly less than the preceding fiscal year’s $3.1 billion. The government has spent $11.158 billion on import of petroleum products alone in the first 11 months of the last fiscal year, saving about $2.4 billion compared to the corresponding period of the previous fiscal year, but it could not help reduce trade gap. The problem does not lie in imports, but in exports which, instead of increasing, are decreasing every year.
The country is facing severe energy crisis and hostile government policies, which are implemented through corrupt official machinery, making things difficult for investors and Pakistan is among one of the worst countries in the doing business index. The ‘witch-hunt’ of businessmen neutralize the effects of the government incentives. As a result, the exports are falling as the exporters have failed to compete in the international market. The myth of the country’s foreign exchange reserves is also based on borrowed money which will certainly increase the size of debt-servicing.
Another report by the State Bank says that direct foreign investment in the country has fallen by 58 percent in financial year 2015. There are some causes which can be avoided to attract the foreign investment, but the official machinery does not need pills, but surgery. Pakistan has lot of products which can be offered to international market, but our missions abroad never worked as marketers. Unless the political leadership, official machinery and business community work in tendon, the economy of deficits will continue to haunt this nation.
