Islamabad, July 3, 2023: Pakistan has made significant progress in its trade dynamics, as official data released on Monday reveals a remarkable 43% decline in trade deficit during the fiscal year 2022-23 when compared to the preceding fiscal year.
The trade deficit of the country narrowed by an impressive 43.03%, amounting to $27.54 billion during the period of July to June in 2022-23. This is a significant improvement from the trade deficit of $48.35 billion recorded in the previous fiscal year.
The primary factor contributing to the reduction in the trade deficit is the substantial decline in imports during the fiscal year. The import bill experienced a sharp decline of 31%, dropping to $55.29 billion in 2022-23 from $80.14 billion in the preceding fiscal year.
This decline in the import bill can be attributed to the government’s implementation of measures aimed at curbing imports. In April 2022, the government imposed a ban on the import of luxury and non-essential items, which played a significant role in reducing the import bill.
The ban was lifted by the government on August 22, 2023. However, the State Bank of Pakistan (SBP) continued to exert pressure on import payments by imposing restrictions on the opening of Letters of Credit (LCs).
In a recent development, the SBP has lifted these conditions, allowing banks to open LCs without requiring approval from the central bank. Experts believe that this relaxation may lead to an increase in the import bill in the coming months.
While the decline in imports has positively impacted the trade deficit, Pakistan’s exports also experienced a decline of 12.7% during the fiscal year 2022-23. The country’s exports decreased to $27.74 billion compared to $31.78 billion in the previous fiscal year.
It is essential to monitor the future trends in imports and exports to assess the long-term implications on the country’s trade balance. Policymakers need to focus on promoting exports to ensure sustained economic growth and stability.
The substantial reduction in the trade deficit reflects the positive impact of the government’s measures to rebalance Pakistan’s trade dynamics. This achievement is expected to contribute to the country’s overall economic stability and bolster foreign exchange reserves.
Moving forward, the government remains committed to implementing strategies aimed at stimulating exports and controlling imports. By doing so, Pakistan aims to strengthen its position in the global trade arena and establish a more balanced and sustainable trade regime in the years to come.
READ MORE: Pakistan’s Import Bill Surges by 43% in May 2023, Trade Deficit Widens
