ISLAMABAD: In response to the widening trade and current account gap, Pakistan’s Caretaker Federal Cabinet has established a ministerial committee to explore solutions to the issue. The trade deficit is anticipated to increase by an additional $5 billion over the next two quarters, sources told WE News.
The newly formed committee will be led by Caretaker Commerce Minister Gohar Ijaz and will include members from various economic sectors, such as the Minister of Industries, Food and Agriculture, and Energy Ministers, among others.
The recent decline in exports has contributed to the growing trade deficit. July exports amounted to $2.068 billion, compared to the previous June’s exports of $2.35 billion. Meanwhile, imports have seen substantial growth, reaching a total of $55.3 billion, with exports standing at $27.73 billion, leading to a trade deficit of $27 billion. This trade imbalance is exerting significant pressure on the country’s balance of payments.
Reasons for Growing Trade Gap
The preceding government had made the decision to allow open imports, which has not only intensified import pressure but has also led to an accumulation of imported containers, subsequently driving up demand for dollars. Some money changers and market dealers have been facilitating importers by providing them with dollars. Concurrently, other market dealers are holding onto dollars.
Certain importers, burdened with accumulated backlogs of 50 to 100 containers, have been paying up to Rs500,000 per container to banks to acquire dollars for the release of their containers. The exact extent of the accumulated backlog and the required dollars for release remain unclear to bankers, with rough estimates suggesting that up to $5 billion may be needed to clear the substantial backlog. This potential influx of spending could be reflected in the import bill for the upcoming months.
