The ballooning trade deficit has compelled the government to go to the International Monetary Fund (IMF), Pakistan Prime Minister Imran Khan said,  days after the IMF and the government reached a staff-level understanding for the revival of the $6 billion bailout package.

“Although our exports are increasing, they are still less than our imports. This causes pressure on our rupee, devaluation of our currency, and inflation,” Khan was quoted as saying by Dawn on Thursday. 

Interestingly, for months officials had been defending the economic trend just by quoting the increase in growth while ignoring the trade deficit altogether. Khan’s remark on Thursday came as a rare acknowledgment of the problem that has plagued the government for too long.  

In the last fiscal (FY 21, which ended in June), the trade deficit widened by 32.9 percent, posting around $30 billion difference between imports and exports. In July, the first month of the current fiscal, it was around $ 3 billion, only to increase to $4.05 billion in August.

In the first quarter of the current fiscal year, July-Oct 2021, the trade deficit stood at $15.525 billion--registering an increase of 103.8 percent from $7.617 billion it had recorded last year during the same period. 

Last month, Shaukat Tareen, special advisor to the prime minister on finance, had also admitted overheating in the economy, mainly driven by consumption. After the pandemic, the government pumped cash through many relief packages, which as a result increased imports.

Tareen was the government's key negotiator in talks with the IMF and defended the government’s move to approach the global lender. He assured that the IMF program, which called for reducing the government’s spendings, won’t kill growth. 

On exports, Imran Khan on Thursday said the country would be making the highest exports this year, other matching economies till the 1960s like Singapore (now around $200 billion) and Malaysia (around $300bn) were far ahead of the country in terms of annual exports.

Khan, who is known for giving special emphasis on overseas Pakistanis, termed them an asset for the country. He said the overseas Pakistanis should be treated like VIPs, incentivizing and facilitating them would benefit the country.

Remittances from overseas Pakistan has helped the country to pay the bills.
(SAM)