ISLAMABAD (Ahmed Mughal):- The Prime Minister Imran Khan led PTI Government failed to achieve merchandise’s export target in first quarter despite currency devaluation and tax incentives to the export oriented sectors of the country.
The PTI Government has agreed with IMF to increase exports by 15.5 percent to $26.83 billion during the current fiscal year. It has also gave commitments to narrow its imports to $51.72 billion by 6 percent decrease in imports and 22 percent in merchandise trade deficit.
The PTI government also given commitment to the International Monetary Fund to increase 15 percent of exports during the fiscal year. Contrary of that target, the country merely increased by 2.75 percent in first quarter of the current fiscal year.
The PTI Govt had accepted the tough conditions of the IMF to save bailout package of $6 billion in May 2019.
According to the Pakistan Bureau of Statistics, Pakistan’s exports increased to $5.52 billion by merely 2.75 percent in first quarter of the current fiscal year as compare to same period of the last fiscal year. The country’s imports were recorded at $11.25 billion in first three months as compare to the same period of the last fiscal year.
Due to unprecedented decrease in imports in first three months, the merchandise trade deficit narrowed by 35 percent to $5.73 billion in July to Sept 2019.
The huge decrease in trade deficit will also help to ease the current account deficit during the current fiscal year. The huge decrease in imports also put pressure on the efforts to increases tax collection during the fiscal year. The Govt has set target tax collection Rs.5.55 trillion during the current fiscal year which was limited to $3.9 trillion in out going fiscal year as imports are main source of the tax collections of the country.
Pakistan also agreed with the IMF to bring down current account deficit to $6.7 billion during the current fiscal year from $13.1 billion during out going fiscal year.
The merchandise trade data compiled by the PBS shows that Pakistan is facing weak economic and production activities. It also shows that the currency devaluation policy of the Imran regime could not support to the efforts to increase in exports so far.
The Government has adopted flexible currency valuation policy and it lets the currency to cross Rs.160 in September 2019 from Rs.124 is same month of the last year. The PTI Govt believe that exports could not increase during last regime of Pakistan Muslim League Nawaz due to artificial currency value. It also believed that former Finance Minister Ishaq Dar held the value of currency and the country lost $31 billion in five year.
The data also support the claim of the traders and retailers that the business activities decreased due to taxation policy adopted in the current fiscal year due to IMF program. Traders have been strikes and agitations against the tax regime of the current fiscal year.
The Pakistan had inked IMF loan program with tight conditions including imposing new taxes of the Rs 733 billion for current fiscal year.
The official data also shows that the production of the country has also witnessing negative growth in July 2019. The growth of the Large Scale Manufacturing Industries has deceased by 3.28 percent in July 2019 as against the same month of the last fiscal year.
The trends in imports first two months of the current fiscal year shows that all sectors excluding machinery group decreased by 21 percent. During the first two months, the imports of the food products decreased by 21 percent, 36 percent decreased in transport sector, petroleum by negative 27 percent, agricultural and other chemicals group by 23 percent, metal group by 26 percent and others sectors by 31 percent.