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Tag: trade deficit

  • Miftah Ismail highlights key reasons behind rupee fall

    Miftah Ismail highlights key reasons behind rupee fall

    Miftah Ismail, Former Federal Minister for Finance, has pointed out key reasons behind the massive depreciation in Pak Rupee (PKR) against the dollar.

    Ismail, who is also General Secretary of PML-N Sindh, in his Tweet on Sundh pointed out a thread on the four main reasons for the recent precipitous decline in the value of the rupee.

    A: Uncertainty about the renewal of the IMF program

    B: Largest trade deficit and fastest-growing imports in history

    C: Fourth highest inflation rates among major countries.

    D: Rapid increase in the money supply.

    Ismail explained that uncertainty about the renewal of the IMF program behind the rupee weakness.

    The former finance minister said: “Our program was ‘revived’ earlier this year and we were supposed to get a $1 billion tranche in July 2021. We are now in November and still, there isn’t an agreement. This is giving markets jitters.”

    In his opinion largest trade deficit and fastest-growing imports are the second major reason for the rupee fall.

    “We are on track for imports of $75 billion or over 24 per cent of the GDP. Both these are the highest in history. This year exports will cover only 37 per cent of imports, down from 44 per cent in 2018. We are moving in the wrong direction.”

    Our trade deficit in on track to be $47 billion or 15 per cent of the GDP. Again both numbers are highest in the history. Current account deficit will be around 5 per cent of the GDP. But for the healthy remittances due to decreased travel etc. we would have recorded the second-highest current account deficit

    The former finance minister said that in our history, after the one of 8.1 per cent in 2007/2008, the last year of Gen. Musharraf. The increased net demand of dollars from foreign trade is thus putting pressure on the Pak rupee. “Until we slow down imports or increase exports, the rupee will continue to be under pressure.”

    Another reason highlighted by the former finance minister is the highest inflation rates among major countries.

    A recent issue of The Economist showed that Pak has the fourth-highest inflation among major counties, two of whom we don’t even have much trade with. “We also have the highest inflation in South Asia.”

    Given that our inflation is more than our trading partners, our exports goods become more expensive and import goods become cheaper. This increases our real effective exchange rate and puts pressure on the rupee.

    Miftah Ismail continued that our money supply has grown from Rs 4.7 trillion to Rs 7 trillion, an increase of 49 per cent.

    Dr Hafeez Pasha estimates that a 1 per cent increase in money forces a 0.6 per cent rise in inflation. The primary cause of money supply increase is record-high government budget deficits.

    “There are other reasons for the continuous devaluation, political uncertainty for one, but these four —-interlinked as they are— I think are the major reasons.”

    Federal Minister for Energy Hammad Azhar in his tweet replied to Miftah Ismail saying: “I thought Miftah sahib was reminiscing about PML-N’s economy. Back then they managed to create such conditions without Covid shocks. The truth is that trade deficit now has risen due to price effect (same goods but more $ outflow due to high prices) rather than volume effect.”

    Dollar hits all-time high at Rs175.73 at interbank closing
  • Pakistan’s import bill surges by 65% in four months

    Pakistan’s import bill surges by 65% in four months

    ISLAMABAD: The import bill of Pakistan surged by 65.15 per cent during the first four months (July – October) of 2021/2022, according to official statistics released on Tuesday.

    The import bill increased to $25.06 billion during the first four months of the current fiscal year as compared with $15.17 billion in the same period of the last fiscal year, according to data of Pakistan Bureau of Statistics (PBS).

    On the other hand, exports of the country registered a growth of 24.71 per cent to $9.44 billion during the first four months of the current fiscal year as compared with $7.57 billion in the corresponding months of the last year.

    The trade deficit of the country swelled by 105.43 per cent to $15.62 billion during July – October of the current fiscal year as compared with the deficit of $7.60 billion in the same period of the last fiscal year.

    The trade deficit widened by 117 per cent to $3.88 billion in October 2021 when compared with the deficit of 1.789 billion in the same month of the last year.

    The import bill during the month of October 2021 increased by 63 per cent to $6.334 billion as against $3.89 billion in the same month of the last year.

    Similarly, the exports exhibited a growth of 16.52 per cent to $2.45 billion in October 2021 as compared with $2.1 billion in the same month of the last year.

    Headline inflation increases by 9.2% in October
  • Pakistan’s trade deficit doubles in first quarter

    Pakistan’s trade deficit doubles in first quarter

    ISLAMABAD: Pakistan’s trade deficit has doubled in first quarter (July – September) 2021/2022 owing to sharp increase in import bill, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.

    The trade deficit has ballooned by 100.62 per cent to $11.66 billion during the first quarter of the current fiscal year as compared with the deficit of $5.81 billion in the corresponding quarter of the last fiscal year.

    The import bill posted an unprecedented growth of 65 per cent to $18.63 billion during the first quarter of the current fiscal year as compared with $11.28 billion in the corresponding quarter of the last fiscal year.

    The exports of the country registered 27 per cent growth to $6.96 billion during July – September 2021 as compared with $5.47 billion in the same period of the last fiscal year.

    The trade deficit on year on year (YoY) basis in September 2021 widened by 70 per cent to $4.1 billion as compared with the deficit of $2.41 billion. The import bill recorded an increase of 50.78 per cent to $6.48 billion in September 2021 as compared with $4.29 billion in the same month of the last year.

    The exports also exhibited a growth of 26.13 per cent to $2.38 billion in September 2021 as compared with $1.88 billion in the same month of the last year.

    Trade deficit balloons 120% to $7.49 billion in two months
  • Finance ministry reviews trade balance situation

    Finance ministry reviews trade balance situation

    ISLAMABAD:  Federal Finance Minister Shaukat Tarin presided over a meeting on Monday to review the trade balance situation.

    Federal Minister for Economic Affairs Division Omar Ayub Khan, Secretary Commerce, Secretary M/o Information Technology, Secretary Finance Division, Governor State Bank of Pakistan Dr. Reza Baqir, Executive Director General BOI, and other senior officers participated in the meeting.

    Adviser for Commerce Abdul Razak Dawood participated through a video link.

    Secretary Commerce briefed the participants about the trade balance situation over the last two months.

    Considering the expansion in economic activity, the import of one-time items like vaccines for COVID-19 as well as increased demand for raw materials has resulted in increasing imports during July and August 2021.

    In his remarks, the Finance Minister stated that the economy is in a state of growth. As the economy registered a growth rate of 4 per cent during FY2021, there is an increased demand for imports.

    As long as the trade deficit is within a sustainable level, it will stimulate economic recovery, he added.

    The Finance Minister stressed upon the Ministry of Commerce to conduct sensitivity analysis and build scenarios for effective forecasting both in imports as well as exports for each month of the year.

    In his concluding remarks, the Finance Minister said that the prudent policies adopted by the present government have stimulated economic recovery amid the COVID-19 pandemic. The economy is heading in the right direction.

    The enhanced revenue collection along with improved ratings (Business Confidence Index and by international credit rating agencies) indicates that the economy has gained momentum and is geared towards inclusive and sustainable economic growth.

    Shaukat Tarin for finalizing tax harmonization at earliest
  • Trade deficit balloons 120% to $7.49 billion in two months

    Trade deficit balloons 120% to $7.49 billion in two months

    ISLAMABAD: Pakistan’s trade deficit ballooned by 120 per cent to $7.49 billion in first two months (July – August) of the current fiscal year.

    The trade deficit was $3.40 billion in the same months of the last fiscal year, according to the Pakistan Bureau of Statistics (PBS).

    The exports of the country increased by 27.59 per cent to $4.57 billion during the first two months of the current fiscal year as compared with $3.58 billion in the same months of the last fiscal year.

    The import bill of the country registered a sharp increase of 72.59 per cent to $12.06 billion during July – August of 2021 as compared with $6.99 billion in the corresponding period of the last year.

    The trade deficit widened even more sharply in August 2021 by 144 per cent to $4.23 billion when compared with trade deficit of $1.73 billion in August 2020.

    The exports of the country were at $2.23 billion in August 2021 as compared with $1.58 billion in the same month of the last year, registering an increase of 41 per cent.

    The import bill for the month of August 2021 was $6.46 billion when compared with $3.31 billion in the same month of the last year, showing a robust increase of 94.90 per cent.

    The exports posted a decline of 4.53 per cent in August 2021 when compared with $2.34 billion in July 2021. However, the import bill increased by 15.39 per cent in August 2021 when compared with $5.6 billion in July 2021.

    Trade deficit widens by 21.6pc in 10 months
  • Trade deficit widens by 21.6pc in 10 months

    Trade deficit widens by 21.6pc in 10 months

    ISLAMABAD: Pakistan’s trade deficit has expanded significantly, rising by 21.6 percent during the first ten months (July–April) of fiscal year 2020–2021, according to official data released by the Pakistan Bureau of Statistics (PBS) on Wednesday. The increase in the trade deficit is attributed largely to a sharp surge in the country’s import bill, which has outpaced the growth in exports.

    (more…)
  • Import bill sharply grows by 70pc in March

    Import bill sharply grows by 70pc in March

    ISLAMABAD: The import bill has recorded an unprecedented growth of 70 percent in March 2021 as compared with the same month of the last year, according to data released by Pakistan Bureau of Statistics (PBS).

    The country spent $5.63 billion on the imports during March 2021 as compared with $3.31 billion in the same month of the last year.

    Experts attributed the phenomenal rise in import bill during March 2021 due to significant decline in foreign trade in the same month of the last year because of restrictions imposed after coronavirus spread.

    In March 2020 the government put a complete lockdown throughout the country in order to prevent spread of COVID-19.

    Similarly in the month of March 2021, the exports recorded a sharp increase of 30.44 percent to $2.36 billion as compared with $1.81 billion in the same month of the last year.

    Pakistan’s trade deficit has widened by 20 percent in first nine months (July – March) 2020/2021 owing to surge in import bill after ease in coronavirus related restrictions.

    The trade deficit ballooned to $20.83 billion during first nine months of the current fiscal year as compared with $17.35 billion in the corresponding period of the last fiscal year.

    The import bill for the period of July – March 2020/2021 increased to $39.51 billion as compared with $34.79 billion in the corresponding period of the last fiscal year, showing a rise of 13.57 percent.

    On the other hand exports also increased by 7.12 percent to $18.68 billion during the first nine months of the current fiscal year as compared with $17.44 billion in the corresponding period of the last fiscal year.

  • Trade deficit widens by 24pc in February

    Trade deficit widens by 24pc in February

    ISLAMABAD: The trade deficit has been widened by 24 percent Year on Year (YoY) in February 2021 owing to increase in imports and decline in exports, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.

    The import bill for the month of February 2021 increased to $4.56 billion as compared with $4.16 billion in the corresponding month of the last year, showing an increase of 9.55 percent.

    However, the exports fell by 4.12 percent to $2.05 billion in February 2021 when compared with $2.13 billion in the same month of the last year.

    The trade deficit widened by 10.64 percent to $17.536 billion in first eight months (July – February) 2020/2021 when compared with the deficit of $15.85 billion in the corresponding months of the last fiscal year.

    The imports posted 7.49 percent growth to $33.84 billion during first eight months of the current fiscal year as compared with $31.48 billion in the corresponding months of the last fiscal year.

    The exports registered an increase of 4.29 percent to $16.3 billion during July – February 2020/2021 as compared with $15.63 billion in the corresponding period of the last fiscal year.

  • Trade deficit widens to $17.3bn in July – February

    Trade deficit widens to $17.3bn in July – February

    ISLAMABAD: Pakistan’s trade deficit widened by 9 percent or $17.3 billion during first eight months (July – February) 2020/2021 of the current fiscal due to surge in import bill for the period, according to provisional data released by the ministry of commerce.

    The trade deficit widened to 17.3 billion during first eight months of the current fiscal year as compared with $15.87 billion in the same months of the last fiscal year.

    Import bill increased to $33.6 billion during the period under review as compared with $31.5 billion in the corresponding period of the last fiscal year, showing an increase of 6.6 percent.

    On the other hand, exports posted a growth of 4.2 percent to $16.3 billion during July – February 2020/2021 as compared with $15.64 billion in the same period of the last fiscal year.

    Abdul Razak Dawood, Adviser to Prime Minister of Pakistan for Commerce and Investment, in a tweet message commented that most of this growth came from increase in import of raw material and intermediate goods, which increased by 7.8 percent.

    The import of capital goods declined by 0.2 percent, while that of consumer goods decreased by 7.3 percent, he added.

    “This shows that the Make-in-Pakistan Policy of MOC is delivering dividends and industrial activity in the country is increasing. The import bill this year also increased because we had to import Wheat and Sugar to stabilize the market prices,” he said.

    Cotton was also imported to to help the Export-oriented industry so that the exports are not hampered.

    During Jul-Feb 2021, the import of Wheat amounted to USD 909 million, Sugar USD 126 million and Cotton USD 913 million (total of USD 1,948 million).

  • Remittances to remain strong for financing trade deficit: finance ministry

    Remittances to remain strong for financing trade deficit: finance ministry

    ISLAMABAD: The ministry of finance on Monday hoped the inflows of remittances to remain strong enough to support the financing of the trade deficit in coming months.

    In its monthly economic update and outlook – January 2021, the ministry said that the sudden surge in imports due to the increase in international oil prices and import of additional food products enhanced imports by $ 1.2 billion alone in December 2020 ($ 5.0 billion) compared to December 2019 ($ 3.8 billion).

    “However, there was no pressure on foreign reserves as Current Account remained in surplus for H1 FY 2021. Looking forward, depending on these explanatory factors, imports may remain $ 4.5 – $ 5.0 billion in next month,” the ministry said.

    Exports are expected to stabilize around current levels, it added.

    “But in the baseline scenario, the trade balance is not expected to further deteriorate. Remittance inflows remain strong and continue to provide strong support to the financing of the trade deficit,” the ministry said.

    The finance ministry said that Pakistan’s economy consecutively suffered from Balance of Payment (BOP) crisis and COVID-19 pandemic kept economy below its potential level.

    Since the start of current fiscal year, economy has started recovering. The government is committed to monitor external balance and its financing closely.

    Furthermore, the government has also taken policy and administrative measures to monitor the supply and market functioning wherever necessary to mitigate inflationary pressure.

    The restoration and acceleration of Pakistan’s productive capacity is a necessity to ensure a high and sustainable growth in the near and longer term. In the near future, the economic recovery is expected to translate into more productive investment expenditures.

    The government is committed to motivate investments in crucial sectors of the economy to enhance productive capacities and to stimulate economic growth.

    Fiscal performance remained satisfactory. Currently, the fiscal policy actions are primarily concentrated on relief measures to support businesses stay afloat and to protect vulnerable segments of society.

    At the same time, the government is focused on containing the fiscal deficit at a manageable level and keeping the primary balance at a sustainable level.

    According to latest fiscal numbers, healthy growth in non-tax revenues, satisfactory performance of FBR tax collection despite issuance of higher number of refunds and controlling of expenditures other than mark-up payments and COVID related would pave the way to maintain the fiscal deficit within the reasonable limits in coming months, the ministry said.

    The finance ministry said that the current outlook ensures economic revival on the basis of continued recovery seen in recent months but there is possibility of slower economic activities especially in services sector depending on the intensity and duration of pandemic.