Trade gap widens 16% to $14.6b

The figures were released two days after Finance Minister Muhammad Aurangzeb disclosed that Pakistan had secured yet another rollover of $3 billion in debt from Saudi Arabia last month. Finance Secretary Imdadullah Bosal external debt repayments were estimated at $21.5 billion, of which the government would seek $10.5 billion in rollovers of bilateral and commercial debt.

Beyond these rollovers, the government remains in constant search of new foreign loans to build reserves, which are already the product of foreign borrowing and the central bank's domestic purchases of foreign currency.

Prime Minister Shehbaz Sharif has promised that the 25th International Monetary Fund (IMF) programme, ending next September, would be the last in the nation's history, a vow that will face its real test before the next general elections. Official data showed imports jumped to $26 billion in the first four months, higher by $2.9 billion or 12.5%.

For the current fiscal year, the central bank has projected imports rising to $71 billion on the back of higher energy import bills. The PBS said cumulative exports during July to October increased to $11.4 billion, a rise of just $890 million or 8.5% over the same period last year.

The government has tried everything in its toolkit to lift exports to a level that reduces dependence on foreign creditors. For this fiscal year it has retained Rs88 billion in subsidies in the budget to provide cheaper loans, mostly to large exporters.

Exports have traditionally remained in the vicinity of $2.5 billion to $3 billion a month, and even a devaluation of Rs100 against the dollar could not give them a major boost. The rupee appreciated by one paisa to Rs276.66 to the dollar on Friday,.

The government has now projected goods exports of $34 billion this fiscal year, against $30.8 billion last year. At this pace, it would miss its 2029 target of $60 billion. Planning Minister Ahsan Iqbal had said earlier that taking exports to $60 billion was a prerequisite to avoiding any future IMF programme.

So far, the government's trade liberalisation policy has not helped exports, contrary to projections by the Ministry of Commerce, the World Bank and the IMF. Under the policy, the ministry and the World Bank had predicted a 14% increase in exports and only a 7% rise in imports.

In the last fiscal year, exports fell 6% to less than $31 billion. The PBS data showed exports flat at $2.9 billion month-on-month in October over September, while imports rose 5.7% to over $6.8 billion.

The monthly trade deficit was up 10.3%, or $364 million. On an annual basis, imports increased 11.8%, or $719 million, while exports rose 2.8%, or just $81 million. The trade deficit widened 19.7% to $3.9 billion, $638 million more than the previous year.

One reason for the absence of an export surplus is the government's preference for large industries, unlike much of the world where small and medium-sized enterprises (SMEs) play a major part in expanding exports.

Prime Minister Shehbaz Sharif has lately begun focusing on SME financing initiatives, but these meetings have not yet translated into meaningful benefits, whether cheaper financing or other advantages available to large traditional players. This week the National Assembly Standing Committee on Finance expressed concern over the impact of closing three international borders for security reasons on exports.

Minister of State for Finance Bilal Kayani agreed there would be an impact but said the government had to shut the border with Afghanistan on security grounds. The only open land route is through China, MNA Mirza Ikhtiar Baig said during a session arranged by the Sustainable Policy Development Institute on Wednesday.