According to data from the Pakistan Bureau of Statistics, the gap between exports and imports in July and August increased by $1.1 billion, or 18%, compared with the same period last year.
Imports climbed to $12.6 billion during the two-month period, registering an increase of $1.5 billion, or 13%. Exports, meanwhile, remained comparatively weak, with shipments falling back to around $2.5 billion in August after reaching nearly $3 billion in July.
The widening trade gap is more than twice the $3 billion external borrowing secured by Pakistan from international capital markets to meet immediate financing requirements. The government is expected to pay an estimated return of around 7.9% to 8.25% on the borrowing, depending on the maturity period.
The latest figures have raised concerns over Pakistan’s growing reliance on foreign borrowing, as key non-debt-generating sources of foreign exchange, including exports and foreign direct investment, have yet to show substantial growth.
Exporters have attributed the sluggish performance partly to the strength of the Pakistani rupee, arguing that it is affecting the competitiveness of local products in international markets.
The government has provided exporters with various incentives, including preferential financing and other financial facilities. However, the export sector has continued to face difficulties in achieving sustained growth.
The government’s new tariff policy, developed with guidance from international institutions and advisers, was expected to boost exports by 14% while increasing imports by only 7%.
However, the latest figures indicate that imports are still expanding at almost twice the rate of exports, raising concerns about the sustainability of the country’s external sector.