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External trade deficit swells to $1.1bn

TAHIR DHINDSA

ISLAMABAD: Pakistan has lost about $1.1 billion in its external trade during the last seven months alone due to adverse trade conditions and the issue will be taken up with the International Monetary Fund (IMF), top official sources told Business Recorder.

To reduce the current account deficit to a reasonable level was one of the conditionality of $1.6 billion Enhanced Structural Adjustment Facility (ESAF). Now the government has decided to seek another strong development programme from the Fund related to poverty alleviation, current account deficit mainly to figure in negotiations.

"We will take up the issue with the Fund, because it is none of our fault that the current account deficit has swelled up so much," a top government official said, adding: "the issue of carrying out domestic reforms positively and in good faith is more relevant."

The current account deficit is not only due to hike in international petroleum prices but the due to other adverse trade conditions as well, sources said.

They said the prices of Pakistan's traditional agriculture items are low in the international market. This includes low rice and cotton prices. Even the wheat was selling at lower price than the last year where Pakistan was looking forward to save something due to less imports, they claimed. And, with the current low yield of sugarcane the country expects little sugar export this year. This might take the gap in the current account to a new width, "sources said.

Sources said Pakistan has fully briefed the IMF about all other benchmarks, about which the government finds little reason to worry about as progress there is substantial and up to the mark.

The huge current account deficit which might off-set progress in other areas, if not taken care of, will be discussed with the Fund's mission team, which might visit Pakistan in March they concluded.