Daily Times

Much has already been said about how simply securing yet another agreement with the IMF would do little to save Pakistan’s economy. But while the honourable finance ministry is busy carving up a line of action to save the treasury based on new, higher taxation targets, little thought is given to the ever-widening gap in the spreadsheet.

With another, much-expected surge in imports from China and India, Pakistan’s trade deficit with nine regional countries rose to a staggering 41 per cent from $5.992 billion recorded last year. The dire consequences, putting immense pressure on the same ministry’s efforts to uplift the country’s economy, should have been enough reason for the Sharif administration to prioritise the trade equation above the other nitty-gritty.

As imports continue to outpace exports, the trade deficit only continues to grow, further exacerbating the economic challenges facing Pakistan, most pronouncedly in the form of downward pressure on the value of the Pakistani rupee, which, in turn, would erode the purchasing power even further, making imports more expensive and entering a self-perpetuating cycle of ruin.

Since the PTI government wished to project their efforts for industrialisation and commerce as purely heroic, surely, their representatives sitting on the opposition benches could guide the executive in chalking up a line of action that helps our industries get ahead of regional competitors. Making a case for trimmed-down imports is easier said than done.

There are not a lot of industries in Pakistan that produce on their own. Even the domestic industries are forced to rely upon imported inputs to sustain production, where intermediate goods account for over half of total imports. Our tryst with a ban on luxury, non-essential imports revealed how it only led to making these products more appealing, boosting the smuggling rackets and facilitating the dreaded informal economy.

Instead, the situation demands immediate action to prioritise policies that promote export-led growth and reduce dependence on imports. This may include investing in sectors with export potential (the short-lived boom experienced by the textile industry) and improving the overall competitiveness of Pakistani products (with constant investments in R&D) in the global market. Choosing to do nothing would put at stake the very foundation of the economy. After all, governments cannot run on borrowed cash forever. *