However, a dismal performance in the first month of fiscal year 2015-16 has washed away chances of such a reprieve.
Like the previous fiscal year, Pakistan’s external trade sector was off to a bumpy start as exports contracted almost 17% in the first month as compared to nominal growth in imports, resulting in a 35% increase in trade deficit in July.
Receipts from exports slipped below $1.6 billion in July – as much as 19.6% or $325 million less than the receipts in the comparative period of last year, according to figures released by the Pakistan Bureau of Statistics on Monday.
As against contraction in exports, imports saw a growth of over 4% as payments against goods increased to $3.4 billion – $131 million more than the payments made in July last year.
Resultantly, the trade deficit in the first month of the new fiscal year 2015-16 widened 34.6% to $1.8 billion. The deficit was $456 million more than posted in the first month of the previous fiscal.
The negative growth in exports highlights difficulties that the country may have to face in balancing external accounts.
Exporters have been complaining about the increase in cost of doing business due to the government’s decision to enhance the rate of electricity, gas tariffs and increasing burden of indirect taxes. The industry’s cost is also growing by almost 3% annually due to the Federal Board of Revenue’s reluctance to clear over Rs93 billion pending refunds.
All Pakistan Textile Mills Association (Aptma) has given the government August 30 as the deadline to resolve these issue or else they will go on strike on September 4. It had earlier given the strike call for August 7, which it extended after Finance Minister Ishaq Dar promised to resolve their issues within a month.
Last year, the PML-N government had launched its economic plan, the Vision 2025, which promises to address all the obstacles that are pulling back economic growth. One of the important targets of the ten-year plan is increasing the exports to $150 billion
However, latest projections of the International Monetary Fund show that the new fiscal year 2015-16 will be as bad as the last fiscal year in terms of growth in exports.
Although the government has projected that in the current fiscal year exports will grow to $25.5 billion or 6.6% up from last fiscal year, the IMF estimates show that the exports receipts will marginally increase to $24.5 billion. Similarly, the IMF has portrayed a negative growth in imports and has estimated that the imports will remain around $40 billion this year.
In the last fiscal year, exports grew to only $23.9 billion, which was the lowest figure recorded in four years.
The monthly trade statistics also depict a depressing scenario. The trade deficit in July contracted one-fourth over June due to a contraction in both imports and exports. The exports fell 20.7% in July over the last month, while imports contracted 23.3%, data from PBS showed.