Exports surge 14 pc as IMF uncertainty looms

KARACHI: Pakistan’s exports rose by 14 per cent to $5.1 billion in the first two months of this fiscal year, despite delays in securing an IMF bailout, Express Tribune reported on Wednesday. This increase has helped to narrow the trade deficit to $3.6 billion, providing some relief amid the ongoing economic uncertainty.

The Pakistan Bureau of Statistics (PBS) reported a $620 million year-on-year increase in exports during July-August, partially offsetting pressures on the external sector due to the unclear IMF deal.

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Imports also grew by 5.7 per cent to $8.6 billion during the same period, resulting in a 4.2 per cent reduction in the trade deficit.

To boost exports, Pakistan recently finalised a trade-liberalisation plan aimed at reducing import taxes, a move that could cost the treasury Rs 476 billion over the medium term. However, the Federal Board of Revenue (FBR) has opposed the plan, citing concerns over revenue targets under the IMF programme.

Despite the export gains, concerns persist about Pakistan’s external debt-creating inflows, which have been slow in the absence of an IMF agreement. The IMF’s executive board calendar does not currently include Pakistan, further delaying the approval of the $7 billion three-year programme.

On a monthly basis, the trade deficit shrank by 12 per cent in August, driven by a 19 per cent increase in exports to $2.74 billion, while imports grew by just 5 per cent. However, the FBR is worried about declining imports, which have impacted customs duties and tax collections.

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The shrinking trade deficit has led to a Rs 102 billion shortfall in FBR’s revenue collection, largely due to reduced imports of high-duty items like vehicles and consumer goods.

The government is also implementing measures to boost foreign exchange reserves, including offering incentives to foreign exchange companies. The Economic Coordination Committee recently approved a Rs 4 per $100 incentive for these companies as part of efforts to raise foreign currency from local markets.