It has finally been revealed that the ongoing trade deficit was created because of a mismatch between the government’s trade and monetary policies. Pakistan’s export competitiveness has seen a significant decline since 2013, but the government has seemed unaware of the reasons for the fall. In a recent report to the Parliament, the Commerce Ministry has finally opened up about the factors that led to the exports falling at such an alarming rate. Despite comparatively low international prices of our biggest import — oil — the country has witnessed an unprecedented trade deficit in the past few years. Economic experts have long been calling on the government to expand the export base, but the authorities have done little on this front. The responsibility of formulating sound macroeconomic policies lies with the government. Export promotion needs to be central tenet of these policies. In Pakistan, the successive governments have failed to devise such policies. It’s almost as if governments have been completely oblivious to the importance of exports for macroeconomic stability. Now that the Commerce Ministry has identified issues and accepted the problem, the authorities would do well to proceed to the next stage without any delay. They need to start working to undo the effects of distortionary policies followed over the last several years. To begin with, the Prime Minister should take personal interest in reviving the country’s falling exports and form a commission comprising members of the business community to charter a framework for the sector. The commission should also be given the mandate to oversee the implementation of its decisions. Moreover, policymakers and the private sector should be engaged in a dialogue on the issue of exports so as to make the trade regime more export-friendly. The trade policy should be reviewed with a clear timeframe in which the government plans to bring down the trade gap. * Published in Daily Times, October 4th 2017.