Curtailing trade deficit biggest economic challenge, says FPCCI chief

Author: Our Correspondent

FPCCI president Irfan Iqbal Sheikh said curtailing the trade deficit in the fiscal year 2022 – 23 would be the biggest economic challenge for the government; without which the country will remain under a constant threat of default and its foreign exchange reserves (FER) will not buildup to a secure level.

FPCCI chief has noted with profound concerns that the trade deficit for the fiscal year 2021 – 22 has clocked at a record $48.66b as per the revised figures and that translates into more than $4b a month on average; while it was $30.96b in the previous year, i.e. 2020 – 21 and this shows a huge increase of 57pc. No country in the world with the size of the economy like Pakistan can sustain or afford that kind of trade imbalance without further slipping into the vicious cycle of trade deficit, exchange rate volatility, and current account deficit (CAD).

Irfan Iqbal Sheikh said that though exports also posted some encouraging growth in the previous year and touched $31.8b, he is skeptical that exports in the year ahead may not be able to hold their ground due to a significant increase in the cost of doing business on the back of an enormous increase in petroleum, electricity and gas prices simultaneously. We are not competitive anymore, he remarked. Irfan Iqbal Sheikh explained that the testimony to the fact that our exports are extremely dependent on textiles is that two third of the total growth in the exports in the previous year has come only from value-added textiles; which must be appreciated. However, we must also be worried over the lack of diversification and broadening efforts in our export basket. Irfan Iqbal Sheikh emphasized that there are only a few countries in the world where we enjoy any meaningful bilateral trade surplus. Whereas, we must diversify our exports, incentivize exporters & export-oriented industries, establish new industrial enterprises & revive sick units, tap new markets, promote services’ export and make full use of preferential trade agreements (PTAs) & free trade agreements (FTAs) – wherever they exist.

President FPCCI has demanded that interest rates on export finance schemes (EFS) and long-term financing facility (LTFF) should be brought back to 3pc and 5pc, respectively. He maintained that it is absolutely imperative to restore the confidence of exporters at the moment. Additionally, the government should consider subsidizing electricity and gas for SMEs and export-oriented industries; as we have to look inwards to control the ever-increasing CAD rather than relying on excessive external borrowing, which keeps bringing us back to the brink of a default every other year.

Share
Leave a Comment

Recent Posts

  • Technology

Digital Innovation: Transforming Pakistan’s Trade Infrastructure

  Pakistan's logistics industry stands at a critical crossroads, grappling with significant challenges that impede…

4 hours ago
  • Top Stories

EU expresses concern over military court sentences against May 9 rioters

The European Union (EU) has expressed concern over the sentencing of 25 individuals involved in…

4 hours ago
  • Pakistan

Ahsan Kamray Elected President of Lahore Garrison University Alumni Association

Lahore Garrison University (LGU) celebrated a milestone event as its Department of Mass Communication organized…

4 hours ago
  • Fashion

Neo Hum Bridal Couture Week 2024: Grand Finale Celebrates Fashion and Social Change

Lahore, Pakistan – December 22, 2024 – The highly anticipated finale of Neo Hum Bridal…

4 hours ago
  • Top Stories

US lifts $10 million bounty on new Syrian leader after talks in Damascus

The United States has removed a $10 million bounty on Ahmed al-Sharaa, the leader of…

4 hours ago
  • Pakistan

Accountability Court postpones verdict in £190 million case

An accountability court hearing the £190 million case involving Pakistan Tehreek-e-Insaf (PTI) founder Imran Khan…

4 hours ago