LAHORE  - FPCCI President Irfan Iqbal Sheikh has said that curtailing trade deficit in the fiscal year 2022 – 23 would be the biggest economic challenge for the government; without which the country will remain under a constant threat of default and its foreign exchange reserves (FER) will not buildup to a secure level.

FPCCI chief has noted with profound concerns that the trade deficit for the fiscal year 2021 – 22 has clocked at a record $48.66 billion as per the revised figures and that translates into more than $4 billion a month on an average; while it was $30.96 billion in the previous year, i.e. 2020 – 21 and this shows a huge increase of 57 percent. No country in the world with the size of the economy like Pakistan can sustain or afford that kind of trade imbalance without further slipping into the vicious cycle of trade deficit, exchange rate volatility and current account deficit (CAD). Irfan Iqbal Sheikh said that though exports also posted some encouraging growth in the previous year and touched $31.8 billion, but exports in the year ahead may not be able to hold its ground due to significant increase in the cost of doing business on the back of enormous increase in petroleum, electricity and gas prices simultaneously. We are not competitive anymore, he remarked.

Irfan Iqbal Sheikh explained that the testimony to the fact that our exports are extremely dependent on textiles is that two third of the total growth in the exports in the previous year has come only from value-added textiles; which must be appreciated. However, we must also be worried over the lack of diversification and broadening efforts in our exports basket. Irfan Iqbal Sheikh emphasized that there are only few countries in the world where we enjoy any meaningful bilateral trade surplus. Whereas, we must diversify our exports, incentivize exporters & export-oriented industries, establish new industrial enterprises & revive sick units, tap new markets, promote services’ export sand make full use of preferential trade agreements (PTAs) & free trade agreements (FTAs) – wherever they exist.

President FPCCI has demanded that interest rates on export finance scheme (EFS) and long-term financing facility (LTFF) should be brought back to 3 percent and 5 percent, respectively. He maintained that it is absolutely imperative to restore the confidence of exporters at the moment. Additionally, the government should consider subsidizing electricity and gas for SMEs and export-oriented industries; as we have to look inwards to control the ever-increasing CAD rather than relying on excessive external borrowing, which keeps bringing us back to the brink of a default every other year.