ISLAMABAD: The Finance Ministry holds the negative growth in exports coupled with failure to check a rise in machinery imports under China Pakistan Economic Corridor (CPEC) as the root cause of the widening trade account deficit, a major component of the current account deficit.
Moreover, the reason for the rise in deficit is also partly attributed to the failure in implementation of October 16, 2017 decision to levy regulatory duty on 731 import items, designed to meet the financial requirements of the export incentive package.
The State Bank of Pakistan (Thursday) reported $12.4 billion current account deficit of Pakistan in nine months of financial year 2017-18. During the same period in 2016-17, the current account deficit was only $8.35 billion.
While commenting on the widening of current account deficit, an official source at Finance Ministry told Customs Today that the massive decline in the international price of oil during 2014, 2015 and much of 2016 led to negative growth in imports during these years, however, by January 2017 imports began to rise 17.6 % in June 2017 to as high as 48.8%t in July 2017, 26.2 %t in October 2017 and 18 % last month. Imports were around $40 billion in 2012 and rose to $48 billion last year.
Similarly, the source said that exports were $24.7 billion in 2012, but declined to $21.9 billion in 2017. During the first year of the PML-N administration, exports rose by 1.1%, however in subsequent years, the growth rate was negative 3.9% in 2014-15, a negative 8.8% in 2015-16 and a negative 0.2% in 2016-17.
The source said that there was an emergent need to resolve all outstanding issues with respect to rising imports and declining exports to check widening current account deficit. In this regard, the government must consult with all stakeholders and agree on a set of policies that would at first stay and subsequently reverse the ongoing disturbing trend in exports and imports.
It is pertinent to note here that SBP reported in its statement that from July 2017 to March 2018 (nine months), the country had suffered more than $29 billion worth trade deficit that had wiped out the entire inflow of remittances, investment and caused an outflow of $12.4 billion to meet the shortfall in the balance of payment position.
