The country's trade deficit is likely to cross $20 billion mark, for the first time in Pakistan's history, this fiscal year, mainly due to sharp rise in imports low exports. Although the State Bank took some bold steps to bring down the increasing imports, analysts believe that these steps had been announced very late, when the imports and trade deficit had already breached all barriers.
The State Bank of Pakistan imposed 35 percent margin on all import Letters of Credit (L/Cs), except oil and some food items from May 23, aimed to bring down imports and the rising trade deficit. Earlier, there was no percent margin on LC opening, and importers were importing goods over and above the requirement, putting extra burden on the national exchequer.
Analysts said that during the remaining two months of current fiscal uear no positive impact of this step may be witnessed, as importers had already has placed huge import orders. However, they believed that in FY09 imports would definitely decline due to the 35 percent margin.
The previous government has set the import target of $32.3 billion. However, the soaring oil prices in the world market and unexpected imports of wheat and other commodities for local consumption badly hurt the target. Imports during ten months have already reached near the target, as the July-April imports stood at $32.06 billion, 28 percent higher than last year's imports of $24.9 billion.
Economists have predicted that this year trade deficit would cross $20 billion, or about 49 percent, with about $37.5-38.5 billion imports and $18-18.5 billion exports. The targeted trade deficit for the current year was $13.1 billion, with $19.2 billion exports and $32.3 billion exports. The country's trade deficit has already reached at all-time high level of 16.08 billion dollars in the first 10 months of current fiscal year as imports stood at 32 billion dollars and exports at 15.25 billion dollars.
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