Pakistan's trade deficit widened to record levels over the last two months, and exports continued to slide, local media said on Sunday.
In an opinion piece, The Express Tribune reported that the government's own data, released by the Pakistan Bureau of Statistics, shows that previous attempts to address the situation clearly failed, with heavy export subsidies and currency devaluation doing nothing to improve the numbers.
Amid the country's widening trade deficit, it is expected that some difficult policy decisions will be made in the coming weeks. Aside from the deficit, the exports were below the government's projection for July and August.
According to the publication, Prime Minister Imran Khan last month had called his financial team to find ways to reduce imports of non-essential goods, including automobiles. Despite this, the number of ads for new imported cars suggests that nothing has come of this proposal.
"While we started the year with significant foreign currency reserves, that cash will disappear remarkably soon if this massive spike in imports continues. In addition, since remittances are not projected to grow significantly, the government may be forced to borrow to shore up foreign exchange reserves. Given the existing debt problems, that would be disastrous," The Express Tribune reported.
It further reported that Pakistan is in no position to opt for consumption-based growth unless the products being consumed are local. But the only way to do that would be to bring back heavy import tariffs and restrictions while transferring some of the failed export subsidies to manufacturers targeting the domestic market.
Meanwhile, in February 2020, inflation had jumped to 12.4 per cent, reported The Express Tribune.
( With inputs from ANI )
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