Amir Khan

Pakistan’s merchandise exports experienced a significant decline of 12.9% to $27.54 billion during the fiscal year 2022-23 compared to the previous fiscal year. “Export contractions continued for 10 consecutive months with a sharp decline of 18.72% in June 2023 alone,” said a senior official of the Planning Commission while talking to WealthPK. Citing data from Pakistan Bureau of Statistics (PBS), the official said that imports fell by 46.80% to $4.18 billion in June 2023 from $7.85 billion in the same month the previous year. In FY23, imports decreased by 31% to $55.29 billion from $80.13 billion in FY22. Since December 2022, the government has restricted the import of luxury and non-essential commodities, and only supported the import of intermediate goods, raw material, pharmaceuticals, food, and energy products.

As a result, the import bill significantly decreased in FY23. “Now that import restrictions have been relaxed, the government has also declared that the State Bank of Pakistan (SBP) would not take any action to impede or restrict the opening of letters of credit (LCs). A nine-month $3 billion stand-by arrangement with the International Monetary Fund (IMF) included this as one of the requirements,” said the official. The government import ban policy led to a 43.03% decrease in trade deficit from $48.35 billion to $27.54 billion in FY23, with a 63.32% drop in trade imbalance to $1.81 billion in June 2023, according to official data. “Exports began showing negative growth in July 2022, which raised concerns as it can pose challenges in maintaining a balanced external account,” the official pointed out.

He said the government’s target of $32 billion for exports in FY23 was missed by a wide margin of $4.46 billion, which can be attributed to internal and external factors, particularly affecting the textile and clothing industry, which accounts for almost 60% of all exports. Textile exports declined 13% to $1.48 billion in June 2023 from $1.71 billion in the corresponding month of 2022, according to provisional statistics shared by All Pakistan Textile Mills Association (APTMA). “Exporters have expressed concerns about the refund system, which is currently experiencing delays of three to five months for processing refunds instead of the initially promised 72 hours.

Alongside this issue, exporters are also grappling with a significant rise in financial and energy costs,” the official mentioned. He said the government should actively support the textile industry by formulating favourable policies, providing financial incentives, and creating a conducive business environment. “This includes reducing taxes, tariffs, and bureaucratic hurdles, as well as offering export subsidies and financial assistance programmes,” he added.

Credit: INP-WealthPk