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Exports unlikely to reach $18 billion mark - LahoreEstate - 05-30-2009 08:07 AM
MUSHTAQ GHUMMAN
ISLAMABAD (May 30 2009): Pakistan's exports are unlikely to touch $18 billion mark--nearly 19 percent lower than the target--by the end of the current fiscal year (2008-09) due to government policies and international recession. The government has fixed $22.1 billion export target for the current fiscal year, a gross overestimation. Actual exports till the end of April 2009 were 12.5 percent less than in the same period of last year.
According to official documents, the government had achieved 79.3 percent of total export target during ten months of 2007-08, but during the same period of the current fiscal year 66.8 percent of the target has been achieved. Commerce Ministry's top foreign trade officials have been engaged in several foreign tours during the last ten months with little positive outcome, in terms of higher exports, to show for the expenses they incurred.
Analysts say that for the country to recover from the decline in industrial output a focused approach must be undertaken by the government that should seek to provide incentives to the export sector and credit at affordable rates, coupled with uninterrupted energy supply. Or, in other words, monetary and fiscal policies are required to strengthen the export sector.
Pakistan's trade deficit crossed $14 billion during ten months (July-April) of the current fiscal year due to negative growth in exports and a decline in imports. A couple of months ago, Commerce Ministry officials were happy when growth in exports was about ten percent, but now it seems that exports have nose-dived.
Reduced imports have shrunk the trade balance to some extent during the first ten months of the current fiscal year but declining trend in exports and a gradual increase in crude oil prices in the international market indicates that this trend is not long-lasting and the government has to revisit its trade policy.
The government increased regulatory duty on dozens of non-essential items, but the result of this decision was not as encouraging as was expected as it resulted in increased smuggling of such items from Afghanistan. A former commerce minister, Humayun Akhtar, stated that exports rose dramatically during his tenure--from $7.8 billion to $20 billion--for which the entire economic team and exporters had played a pivotal role.
Talking to Business Recorder, he said that Pakistan must demand free trade agreement (FTA) from the European Union (EU) and the US to boost its exports. He further questioned as to how exports could improve when exporters were grappling with issues like load shedding, non-availability of capital and absence of tax incentives to the exporters.
Exports also declined because of external factors, notably global recession that has negatively impacted on the growth rate, employment and poverty levels in the country. At a recently held trade advisory council meeting under the auspices of Commerce Ministry, most of the industrialists, exporters and other trade bodies stressed upon the government to provide incentives to industry or else more and more units would close down.
Executive Directors of International Monetary Fund (IMF) commended the authorities for the progress achieved under the stabilisation program. They observed that fiscal consolidation and improved coherence between fiscal and monetary policies had helped to tackle the roots of large imbalances, while structural reforms had progressed broadly as envisaged. As a result, the exchange rate broadly stabilised; inflation had come down; and foreign reserves had strengthened. It is now up to the government to support the industry in general and exporters in particular in the forthcoming budget, so state analysts.
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