Pakistan is all set to post its highest-ever trade deficit in the current financial year ( FY22) as the country recorded a whopping $35 billion trade deficit in just the first nine months. Ballooning import bills and rising global commodities prices are said to be behind the surge.

In Financial Year 22 (starting from July), the import bill touched $58.7 billion–almost double the same period last year—while the export was recorded at around $23.3 billion, which grew by 23 percent in comparison to last year. 

The trade deficit has been rising for the last nine months and is all set to breach the previous record of $37.7  billion in the FY18. The deficit is likely to touch $45 billion. 

Data released by the Pakistan Bureau of Statistics showed that in March, the country recorded a trade deficit of $3.45bn, an increase of 12 percent from a month ago. In comparison to March last year, it grew by almost 5.5 percent. In the same month, the export was recorded at around $2.5 billion. 

In the financial year 2017-18, the trade deficit reached an all-time high of $37.7 bn, which came down to $31.8bn the next year (2018-19) and then further declined to $23.2bn in 2019-20. In the last fiscal (FY 21, which ended in June), it again surged to $30 billion. 

Significantly, despite months of efforts, the government has failed to revive the IMF’s $6 billion dollar bailout package, putting further pressure on the country’s fast depleting foreign exchange reserve. 

So far remittances from nonresident Pakistanis have helped manage the trade deficit. However, in the long run, the growth in the trade deficit would certainly surpass the limit beyond which it could not be managed by remittance.

The ongoing political instability and suppressed electricity fuel prices will also drain the country’s resources. With possible chances of elections, the government has avoided tightening its monetary policy, resulting in the already skyrocketing inflation. 

(SAM)