Government blames global commodity prices for heavy import bill

Financial Advisor Shaukat Tarin chairs the Trade Balance Review Meeting. Courtesy Photo PID

Meeting to review trade balance position, imports of food, fuel oil and vaccines will soon be reduced and lead to lower trade bill

Prime Minister’s Finance Advisor Shaukat Tarin chaired a meeting on Thursday to review Pakistan’s trade balance position after economic data for November 2021 revealed a record $ 7.85 billion in imports against $ 2.884 billion in exports.

According to a statement released by the Finance Division, the meeting, which was attended by several members of the federal cabinet, reviewed and discussed the draft import law of July-November 2021. commodity prices, in particular the energy, steel and industrial raw materials, ”he added.

Data released by Pakistan’s Bureau of Statistics (PBS) shows that in the five months under review, the country’s exports reached $ 12.344 billion, an increase of 26.68 percent year-on-year. During the same period, imports jumped to $ 32.934 billion from 19.468 last year, an increase of 69.17%. The country’s trade deficit for the July-November period stands at $ 20.6 billion, the highest on record.

The government, in the budget for fiscal year 2021-2022, set a target of $ 28.4 billion for the annual trade deficit. With a value already exceeding $ 20 billion in just five months, it seems unlikely that the authorities will be able to meet their target. However, the Commerce Department estimates that increasing exports would also allow it to exceed its annual target of $ 26.3 billion.

According to the statement of the Finance Division, part of the reason for the heavy import bill is “the high importation of [coronavirus] vaccines. ”He also asserted that the meeting had been informed that there would be less importation of food, fuel oil and vaccines in the coming months, which would reduce the pressure on the commercial bill during the second half of the current fiscal year.

Last month, the State Bank of Pakistan implemented a cash margin requirement for a large portion of imported goods, along with a cut in consumer finance, to reduce imports. However, this has so far not had a significant impact on the import bill.

“At the conclusion [of the meeting], the advisor to the Prime Minister in charge of finance and revenue advised the authorities concerned to take effective political measures to reduce unnecessary imports of luxury items, ”the statement added. However, there was no information on what measures, if any, the government plans to take to curb imports, especially food and fuel oil.

The government is preparing to present a “mini-budget” this month as part of the “prior actions” required by the International Monetary Fund (IMF) to revive a stalled $ 6 billion loan facility. Designed to dampen growth, observers fear this will put increased pressure on the rupee, potentially keeping the import bill high.

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