The outgoing fiscal year has left a record trade deficit – $48.66 billion – the highest one in the history of Pakistan. The figure leaves a matter of retrospection for our policymakers. The trade deficit in 2020-21 was $30.96 billion, which is 43 percent less than the fresh figures.
In all, the import bill was $80.51 billion during the 2021-22 fiscal year, which was $56.12 billion a year ago. On the other hand, exports, however, did not register such a massive increase leaving the government with the only option of going to international lenders to seek the dollars to jack up reservoirs. The coalition government seems clueless to stem the tide of the rising trade gap. Even the month-to-month analysis of figures shows the trade gap went up to $4.84 billion in June from $3.66 billion last year. The reasons could be many but the basic one is the rising prices of essential commodities, such as petroleum products, wheat, steel and cooking oil. Pakistan has no other option but to import these essential items. The government in May banned the import of 800 things calling them luxury or not-so-important but it seems the scheme did not work out well. One smart solution to shorten the trade gap is to increase exports, but the fact is that exports remained at $2.5 billion to $2.8 billion a month, which should have been much higher
What Pakistan immediately needs to do is: turn to alternative energy sources and the cultivation of edible oil plants (palm, soya bean, etc) on a mass scale. Pakistan being an agricultural country has failed to be reliant on its domestic production of cotton, and wheat. But on the export front, Pakistan was hardly able to cross the psychological barrier of $30 billion this year and the total exports were $31.845 billion in the just-ended fiscal year. Pakistan can significantly increase its exports if it gives a good incentive to the rural economy. There were days when Pakistan had surplus cotton but the cotton farmers were never able to see a comfortable month. Textile exporters should work more to come up with value-added products to increase exports. More out-of-box solutions are needed to tackle the economic turmoil. Given the international market trends, we should be ready to face difficult times ahead.