The revised export target of 19.5 billion dollars may also be missed according to the latest figures released by the Federal Bureau of Statistics (FBS). The original export target, it may be recalled, was 22.1 billion dollars for the current fiscal year while total exports for the 11 months ending May 2009 amounted to 14.998 billion dollars, according to the FBS.
There is nothing sacrosanct about export targets as they consist of an educated guesswork on the part of the government based on the agriculture output of those crops that are exported, their likely value addition along the manufacturing chain and indeed on the state of the economy of major buyers of our products.
Fiscal year 2008-09 was characterised by an unprecedented rise in load shedding which, together with high interest rates, the outcome of negotiations with the International Monetary Fund (IMF) as part of the 7.6 billion dollar stand-by arrangement, led to a negative 7.7 percent growth in large scale manufacturing (LSM).
This, in turn, had obvious repercussions on industrial output in general, including that of our major export industries. If one sprinkles the element of a global recession and the fact that most of our export items are consumer items which are the most affected during a recession one can easily understand the raison d'etre of our inability to meet the export target.
Critics of the system allege that the government's way of doing business may also contain an element of deliberate over estimation of exports as it would have allowed the government some manoeuvrability in its ongoing negotiations with the IMF - a manoeuvrability that is time bound as it would automatically end at or near the end of the year.
Such an approach is not unique to the present dispensation. Be that as it may the time of reckoning has come and the government will have to make adjustments in the budget to ensure that the pressure on the balance of payment eases in the forthcoming fiscal year.
The two obvious ways of reducing such a pressure are reducing imports and/or promoting exports. Import reduction at this point in time would largely depend on the international price of oil which has reached 70 dollars per barrel. According to data released by the Petroleum Ministry the methodology used for implementation of the Petroleum Development Levy (PDL) implies zero revenue for the government once the price of oil reaches 70 dollars per barrel.
In other words either the forthcoming budget is likely to incorporate a different methodology for a tax on this product, a major source of meeting revenue targets to contain the budget deficit during the current fiscal year, or it will have to widen the scope of other taxes sufficiently to meet the revenue targets.
Exports however can and must be increased through revisiting policies that apply to our major export items. It must be noted that cotton and related products account for a major source of our export revenue. While recession did impact negatively on sales abroad yet the government can undertake measures/policy revisions to support the sector.
Cotton and related industry must be supported through incentives but unfortunately these may not be adequate if load shedding continues on the present scale. Thus energy, as a major input in most manufacturing, must be the major priority of the present government that is now into second year of its tenure.
As matters stand today the comfort zone in this regard is not that high with banks refusing to extend credit to rental power projects, consisting of short term measures to meet the energy deficiency, and hydel dams as well as Iran-Pakistan gas pipeline still a long way away from operation.
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