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Commerce Ministry striving for bridging trade deficit

Commerce Ministry striving for bridging trade deficit

ISLAMABAD: The trade deficit between the imports and exports reduced to $ 0.50 billion in the current fiscal year as compared the previous fiscal year as in the current year the trade deficit is $ 19.90 billion whereas it was $ 20.40 billion last year.

“In order to promote exports and reduce the gap between exports and imports, the Ministry of Commerce (MoC) is carrying on consultation with all the stakeholders on inclusion of incentives to exporters in the upcoming Strategic Trade Policy Framework in 2015-18,” a well-placed source at MoC told this scribe here on Wednesday.

The source said that the trade deficit had real and financial effects on the economy; the real effect referred to impacts on employment, incomes, and manufacturing capacity, whereas, financial effects related to accumulated indebtedness as a result of internal and external borrowing to finance the deficit.

“The borrowings from external sources or selling off long-term capital assets to finance current purchases of goods and services, undermines future production. Trade deficit also gives rise to inflationary pressure, in the form of higher prices,” the source observed.  The source said that major sectors affected in the wake of trade deficit were domestic investment, domestic production and employment.

“In 2011-12, the investment to GDP ratio recorded at 15.1%, which reduced to 14.6% in 2012-13, this rate further reduced to 14.0% in 2013-14 and savings slipped to 12.9% in 2013-14, against the target of 14%” the source recalled adding that last year, the savings-to-G D P ratio was 13.5%.

The source said that manufacturing sector registered a growth 5.55% in 2013-14 as compared with growth of 4.53% in 2012-13 and over the last year, the unemployment rate increased to 6.2 % in 2012-13 as compared to 6.0 % in 2010-11.

Furthermore, the source added that the money, credit and stock market situation worsened due to widening trade deficit over the past few years, consequently, in order to promote exports and reduce the gap between exports and imports, the Government undertook various initiatives in the Strategic Trade Policy Framework (STPF 12-15) and Federal Budget 2014-15.

 

The source observed that MoC was in the process of formulating new Trade Policy 2015-18 which encompassed review of previous export promotion schemes and introducing new export promotion strategy. “Besides, this all proposals for export promotion schemes have been invited, from the public and private sectors, which will be considered and incorporated in the new Trade Policy”, the source added.