Daily Times

That the trade deficit bloated by 19.49 percent to $2.391 billion in September goes to show just how precarious the external position is. It turns out that imports had been rather suppressed over much of the last fiscal year and for the first couple of months of the new one, and the government also celebrated July’s unexpected jump in exports, but now that regulatory duty on import of raw material and semi finished products has been abolished imports are right back up. Of course there is also the little matter of having to import wheat and sugar because the government badly mishandled the supply chain at home.

Hopefully the government will not be caught in a position once again where, according to the only plausible interpretation of its own explanation, it is held hostage by interest groups and so-called mafias to the extent that it is just helpless as ordinary Pakistanis are unfairly robbed of their honest incomes and savings in the form of unnecessarily expensive items of daily use. If only it had acted in time there would have been no need to waste precious foreign exchange on wheat and sugar at this point in time. And while the surge in import of raw material in a way is a very good sign since it confirms that industry is in the process of growing again, it will still worry the government because exports are not rising at the same time.

From around end-July to mid-August it seemed that the government’s decision to reopen the economy ahead of other countries in the region got it a foot in the door of the export market. But that optimism quickly dissipated when first rains devastated Karachi and hurt the export chain and then the coronavirus decimated demand in our traditional export destinations to a far greater degree than anticipated. Since all this has happened at a time when remittances, a very precious form of foreign exchange inflow since their annual quantum matches export revenue, are also declining means that the government has little time to think out of the box and come up with an idea that works. Hopefully it will not resort to what governments always seem to fall back on and just blindly, and very unfairly, make up for the loss by raising all sorts of taxes. It is time for its finance team to get into a huddle now and adjust policy before it is too late. *