By Sajid Irfan

ISLAMABAD, July 27: Being an import-oriented country, Pakistan has to pay heavily for imported items like fuel, medicines, wheat, electrical and electronic equipment, iron and steel, vehicles, chemicals, etc, which is putting the foreign exchange reserves under pressure.

Dr. Amanat Ali, Associate Professor of Economics at Quaid-i-Azam University, Islamabad, told WealthPK that the foreign exchange reserves are continuously decreasing due to increasing import payments. He said the total import bill of Pakistan has increased to $80.02 billion during the fiscal year 2021-22 as compared to $58.38 billion for FY21. Exports also posted an increase of 25.51% to $31.76 billion during FY22 as compared to $25.30 billion in the preceding fiscal year.

“High current account deficit and depleting forex reserves have pushed up the dollar rate beyond Rs230 in the open market. Higher dollar rates mean the country has to pay more for the same quantity of imports,” he pointed out.

Dr. Amanat mentioned that the country has imported oil worth $17.03 billion during the first 10 months of the previous fiscal year 2021-22 to meet its energy needs. He said liquefied natural gas (LNG) witnessed an increase of 82.90% in value, while LNG imports jumped by 39.86% in quantity during the period under review. From July-February FY22, around 75.64% of gas was domestically produced, while 24.36% was imported. Pakistan has also imported coal for power generation which is 75% of the total power generation.

Dr. Amanat noticed another problem in agriculture sector which also affects the economy. He said the production and processing of sugarcane is in the hands an elite class which doesn’t pay adequate taxes.

He suggested that Pakistan should ban some of the imports to decrease import bill and save the foreign exchange reserves.

“The banned imports may include luxury items, cell phones, pet feed, etc. which are only 3 to 5% of the imports. If Pakistan wants to minimize import bill, then there is a need to minimize the import of necessary items and to focus on finding alternatives,” he said.

“The Oil and Gas Development Company Limited (OGDCL) is now producing 37,000 barrels per day which is 48% of the country’s total production. The OGDCL also produces 900mmcfd gas, which is 29% of the total production. The OGDCL also produces 850 metric tonnes of liquefied petroleum gas (LPG) per day, which is 37% of the country’s total production,” he added.

Dr. Amanat said the Government of Pakistan should focus on finding new oil and gas reservoirs to minimize dependence on imported fuel.

Credits: INP-WealthPk