An 81.4 percent jump in the trade deficit in the first month of the new fiscal year would have given the commerce ministry a lot to think about, especially since their colleagues in the finance ministry have staked their, and the government’s, reputation on a very expansionary budget that will not see the year through unless exports pick up in a substantial way. The biggest problem is that, considering the nature of our production-and-export matrix, any uptick in exports necessarily pushes up imports because of all the raw material that has to be brought in to feed the expansion. The government’s response, of greenlighting export earnings to the tune of $40 billion in the current fiscal year, up from about Rs25 billion last year, seems very impressive on paper but also begs two very important questions. One, surely they don’t think textiles will fetch $21b, non-textiles $11.5b and services $7.5b this year just because they wish it so, so they must have a concrete plan of action the details of which they haven’t yet made public. So when can that be expected? And two, if increasing exports increases imports, then how much do they expect a good 60pc jump in exports to push up imports, or do they expect imports to somehow remain static for this year while they meet their targets and impress the IMF? The government is no doubt aware that the current account has started to come under pressure once again. Despite being positive for almost the entire previous fiscal year, it slipped into negative territory once again just at the end. And the reason, once again, was the stimulus given to exports. The government is going to have to wrap its head around this particular problem because it can offset even its best made plans. Pakistan’s economy got back on its feet a lot faster than most others after the pandemic and the lockdowns, and now it is perfectly placed for a takeoff. However, a continuously boating current account deficit can hold it down much longer than would be tolerable for an expansionary policy like the one Pakistan has currently adopted. The rupee’s eroding value is also starting to show in the deficit as well as prices. The sudden fall from Rs153 to Rs163 against the dollar in a matter of ten days or so will have even more pronounced effects with time and inflation, too, can become a big problem unless the right steps are taken rather urgently. Pakistan’s trade deficit peaked at $37.7 billion in FY2018. But the PTI administration controlled it and lowered it to $31.8 billion in FY2019 and $23.18 in FY2020. But now the trend seems reversing as last year it clocked in at $30.8. And now in just one month it has ballooned more than 81 percent in just the first month of FY2022. The trend seems reversing, so the government must act with great urgency or watch all its gains go waste just when it needs them to count. *