During the 10-month period from July 2016 to April 2017, Pakistan’s current account deficit rose to an alarming amount of $7.2 billion (Dh26 billion), which is 200 per cent higher than the same period in the last financial year (2015-16). The continuous surge in the country’s imports, month after month, is resulting in an unprecedented trade account deficit, which, in turn, is causing a dangerous current account deficit. The people of Pakistan have a right to understand why this is happening!
Pakistan’s trade deficit is increasing at an alarming speed in the current financial year, but I am surprised that Trade Minister Khurram Dastgir Khan has not spoken a word, so far, as to what is the actual reason for the unprecedented trade deficit, and what is the solution to this serious problem. Even the country’s Finance Minister, Ishaq Dar, who is responsible for maintaining a healthy balance sheet for the country, has not spoken a word on the deteriorating current account deficits, which might take us back, once again, to the doors of the International Monetary Fund (IMF). Some media reports suggest that huge machinery imports are causing the trade deficit, which is resulting in a current account deficit, and once these machines being imported are installed and geared into production, the country’s exports will increase, which will eventually bring down the trade account balance to a satisfactory level.
We have been reading this unconvincing argument for a long time. How long will this cycle of importing machinery, installing and going into production, take? I think it is high time Pakistan’s economic managers take the matter of alarmingly high trade and current account deficits very seriously and come out with a detailed analysis of what actually is causing the issue and what solutions are there.
- The reader is based in Lahore, Pakistan.
