For July and August 2017 in comparison to the year before, the Pakistan Bureau of Statistics (PBS) notes an improvement - exports rose from 327.45 billion rupees in 2016 to 368.4 billion rupees in 2017 while imports rose from 820.5 billion rupees to 1.031 trillion rupees in 2017. The trade imbalance, however, rose from negative 493 billion rupees in the first two months of 2016 to 662.8 billion rupees in July-August 2017 or a whopping rise of 34.42 percent - data that should raise the hackles of any government.
Trade figures show a steady rise in the trade imbalance during the entire tenure of the PML-N government. In 2012-13, the trade deficit as per the State Bank of Pakistan website was negative 15.3 billion dollars, in 2013-14 (the first year of the PML-N government) it rose to 16.59 billion dollars, in 2014-15 it rose further to 17.26 billion dollars and last year the trade deficit rose further still to negative 19.28 billion dollars. In other words, there has been an annual rise in the trade deficit since the PML-N took over the government and this is in spite of the fact that the international oil and products' prices plummeted during this time period which had previously accounted for a sizeable import bill.
It is relevant to note that export promotion measures amounting to 180 billion rupees that were announced by the then Prime Minister, Nawaz Sharif, in January this year sadly remain largely unimplemented because of the clause that their applicability be limited to those who show a 10 percent increase in exports. Exporters have lamented this clause and pointed out that without the incentives, the likelihood of a rise in exports is unlikely given that our productive sectors are struggling with higher input costs relative to our competitors (higher energy costs, higher transport costs due to heavy reliance on taxes on oil and products as a revenue source for the government, and delays in refunds. No doubt, these factors compel the exporter to borrow to meet his liquidity needs which, in turn, raises the input costs further). In addition, an overvalued rupee negatively impacts on the competitiveness of our products in foreign markets (even though the electricity tariff is determined in US cents which implies an overvalued dollar would effectively reduce input costs).
The rise in the trade imbalance needs to be tackled forthwith and in this context, one must appreciate the efforts of the Prime Minister and the Commerce Minister who are clearly brain-storming on the appropriate measures that need to be put in place to resolve this issue. This is in marked contrast to the four-year Sharif administration where this issue was not dealt with in an effective manner. So far, the Prime Minister has only held several meetings and discussed various proposals to deal with rising imports and declining exports; however, it is time to announce measures and initiate their implementation because with each day's delay the trade imbalance is deteriorating, placing ever-rising reliance on foreign borrowing.
The prime Minister has also reportedly directed Pakistani diplomatic missions abroad to serve as economic and trade ambassadors - a plea that has been made by nearly all of his predecessors with little or no success. Perhaps the time has come to set quantifiable goals which if unmet reflect on their performance reports.
Copyright Business Recorder, 2017