Pakistan’s trade deficit in July-December, the first half of the fiscal year, narrowed by 5 per cent from the same period in 2017, helped by efforts to curb imports and ward off a looming balance of payments crisis, the finance ministry said on Thursday.
The trade deficit fell 5 per cent to $16.8 billion, from $17.7 billion in July-December 2017, with imports down 2 per cent to $28 billion from $28.7 billion and exports up more than 2 per cent in the same July-December period, the ministry said.
In the month of December 2018, imports fell by more than 12 per cent to $4.3 billion from $4.9 billion in the same month a year earlier, while exports rose 5.5 per cent.
‘Data indicates that the import compression measures taken in the supplementary Finance Act 2018 have firmly taken hold and are now effectively curtailing imports as per policy regime of the government,’ it said in a statement.
It said the narrowing in the deficit ‘augurs well for the overall balance of payments in the country’.
The government of prime minister Imran Khan came to power in August last year, facing an immediate balance of payments squeeze that forced it to seek billions of dollars in foreign loans and take steps to bring down its current account deficit estimated at 5.8 per cent of GDP.
It imposed a series of regulatory duties on a number of items to slow imports. At the same time, repeated devaluations saw the Pakistani rupee lose around a quarter of its value against the dollar since the end of 2017.
The trade balance has also benefited from a fall in global oil prices which has eased pressure on Pakistan, a net energy importer.
Islamabad is currently engaged in discussions with the International Monetary Fund over a possible bailout although a visit by an IMF team in November ended only with an agreement to keep talking.
However the government has agreed a $6 billion package with Saudi Arabia in mixed loans and oil payment deferrals and a similar package with the United Arab Emirates. China has also been reported to have agreed to lend Pakistan $2 billion to help shore up the currency.
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