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Trade deficit surges by 134pc

Apr 22, 2019
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Bro who told you rupee was artificially maintained for 7 decades?
The REER value of rupee never exceeded 110 (on the higher side) during musharraf or even ppp era. It was plmn tenure in which REER crossed 130 threshold for the first time, and opened the flood gates for BoP crisis.

Zimbabwe is printing those notes because of bankrupcy due to BoP crisis same as what you see now in Lebanon, or what happened in argentina. This is due to buying more stuff than you can afford. Artificially manipulated currency leads to BoP crisis to bankrupcy, and when the bubble bursts this is what happens.

You should be thankful that Pakistan contained its BoP crisis before it got out of hand otherwise you would be seeing a million pkr note.
My patriot brother, let's just agree to disagree.
 

Patriot forever

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My patriot brother, let's just agree to disagree.
Bro I think this will clear any disagreement. Not everything is political, zimbabwe and lebanon are witnessing hyperinflation and extreme currency devaluation because they artificially manipulated currency and pegged it to dollar like plmn did not the other way around.

"As we all know, the current account is meant to be balanced against the sum of the financial and capital account which surely has not been the case in Lebanon. The country has been plunged in a deepening deficit in the Balance of Payments due to shortage in supply of the Foreign Currencies in the Lebanese market. For decades, Lebanon has been importing more goods, services and capital than it has been exporting even under the current currency crisis. However, the funding of the BoP has fueled economic growth for the past years but it pushed the country to go into debt to pay for its consumption. As declared by Blom bank Chairman Mr. Saad Azhari in an interview with Bloomberg Television yesterday, the main problem that we have in Lebanon is the balance of payments deficit and this issue will not be resolved until we have a new government with a real economic plan that will unlock an IMF program. Moreover, Mr. Azhari noted that the State has lots of assets that can be used to boost the central bank’s reserves."



" Zimbabwe’s currency crisis has been long-running. It goes back to the fixed exchange rate days and shortages of foreign currency since independence, to the rapid depreciation and re-denominations of the currency during the 2000s, culminating in hyperinflation and the eventual formal ‘dollarisation’ of the economy in 2009."

 

waqasmwi

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View attachment 752173

Pakistan’s merchandise trade deficit in May ballooned by 134 per cent from what it was a year ago on the back of lower export proceeds and higher than expected imports, commerce ministry data showed on Wednesday.

The monthly deficit reached $3.432 billion in May 2021 from $1.467bn a year ago raising fear it will create a problem for the government in controlling external accounts. In rupee terms, the trade deficit was posted at 125.2pc on a year-on-year basis.

The trade gap has been widening since December 2020. The surge in trade deficit is mainly led by exponential growth in imports with comparative slow growth in export proceeds from the country.

Between July and May 2021, the trade gap widened by 29.5pc to $27.275bn in the 11 months of 2020-21 from $21.065bn over the corresponding period of last year.


While in FY20 the country’s trade deficit had narrowed to $23.099bn from $31.820bn, this target was already crossed in 10 months of FY21, indicating serious pressure on the external side due to rising imports.

The import bill went up by 77.8pc to $5.090bn in May 2021 from $2.863bn over the corresponding month of last year. On a month-on-month basis, the import bill decreased by 3.23pc.

Between July and May FY21, the import bill increased by 22pc to $49.839bn this year as against $40.866bn over the corresponding months of last year.

The import bill is rising mainly due to the increased imports of petroleum, wheat, sugar, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines.

Last month the import of duty-free imports posted growth of 73.78pc and dutiable imports grew 94.84pc on a year-on-year basis. It clearly reflects that the robust growth in duty-free imports is mostly related to raw materials and semi-finished products duty on which duties and taxes were exempted in last year’s budget.

The increase in dutiable imports is because of an increase in regular imports of smuggled prone items such as tyres, textiles and tea. As a result, the customs duty collection in the month under review also posted robust growth.

The continuous decline in imports in the first two years of the incumbent government had provided some breathing space to the government in managing external accounts despite the downward trend in exports. However, rebounding imports are likely to create pressures on the external side.

The growth in remittances at the movement will be sufficient to finance the import bill.

However, it is believed that the current account deficit in FY21 will remain in the range of $4bn to $6bn by the end of June.

Exports posts a growth year-on-year 18.7pc to $1.657bn in May 2021 from $1.396bn over the last year. On a month-on-month basis, exports dipped by 25.3pc. The month-on-month dip is mainly because of a substantial drop in exports proceeds in May despite lower base in May 2020 that provided a lower base for higher growth.

In reality, the month-on-month decline is a worrisome factor for policymakers.

However, in the 11 months of FY21, export proceeds rose by 14pc to $22.563bn as against $19.801bn in last year’s corresponding period.

Adviser to the prime minister on commerce Abdur Razzak Dawood in a statement said the credit of this increase in export proceeds went to the exporters for maintaining the momentum of country’s exports during a year marred by contraction and uncertainty in major markets.

Mr Dawood said the dip in exports to below $2bn mark was because of the extended Eid holidays, aimed at curtailing the spread of Covid.

The value-added sector has already warned the government about a possible shortage of raw materials in coming months. The stakeholders warned the government that if cotton yarn was not made available in the required quantity, export orders in hand would eventually be diverted to rival countries. In the last Economic Coordination Committee meeting, the government had exempted duty and taxes on the import of cotton yarn.

Over the next two-years, Shaikh Chillis will give a new fatwa declaring trade deficit and CAD to be now halal due to purification by his holiness.
 

Sidacca

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At times of pmln, all our project's cost (the company I'm working with) were escalated pkr @140/usd where the actual rate was 110 ...why....?
Because our Financial Analysts by that time (all of them were CFAs) realised that Dar sb is playing with fire and these artifical methods will bite us back really hard as a nation and their predictions were pinpointed and were praised by the management. 😥
 

Path-Finder

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Over the next two-years, Shaikh Chillis will give a new fatwa declaring trade deficit and CAD to be now halal due to purification by his holiness.
I am ALWAYS amazed by the leaguey mahjay, gamay and chadday and their prostration to their mians tooi. Absolve their kartoot by shuffling/shifting the blame elsewhere YET This f#ck up is manufactured by that overgrown swine dalla dollar dar. There is a reason why that pig is on the run!!
 

Patriot forever

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Over the next two-years, Shaikh Chillis will give a new fatwa declaring trade deficit and CAD to be now halal due to purification by his holiness.
Ideally for a 3rd word country CAD has to maintained in the range of 1-2% (if maintained effectively gdp to external debt ratio will fall naturally) surplus is a bonus and is never a norm (target during the ongoing FY was also in this range). Extreme CAD on the back of currency manipulation leads to a cycle if not corrected (at a great cost to people) will only lead to bankruptcy (end game).

Its pure economics not politics. Look at India and Bangladesh countries with similar dynamics as ours, how they meticulously manage CAD in a narrow range along with a market based currency and attained sustained growth, when was the last time they went to imf?
 

TheSnakeEatingMarkhur

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Oh I see. So for seven-decades, all those tyrants and Prime Ministers who defended and protected the Rupee were all wrong.

Just like 21 Prime Ministers before Cartoon-e-Azam PM Imran Khan did not allow Indian Occupied Kashmir to be annexed due to full scale war deterrent, were all wrong too. Simply because they didn't lose it, meant they didn't scream to the international community for help like this loser does for losing it.

Are you that naive that you believe this is the reason for having a strong Rupee and weakening it automatically increase exports?

Do you remember when Zimbabwe was printing one hundred trillion Zimbabwean dollar notes?

Usual Patwari BS.. previous govts and dictators kepts rupee string through economic policy not by wasting 6 billion dollars to keep the dollar artificially low..
 

Patriot forever

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Zaidi sahab showing a little bit of professional jealousy, its natural. He did a good job himself so i have nothing against him.

Tax in all categories have increased propotionately, its natural and given considering increase in imports, significant increase in retail sector. It shows economic growth and the point i mentiined previously about buying power taxes are one of the best indicators (do keep in mind that there were no new taxes in the last budget).

I just want to add 3 things to give his statement a balance.

1) During the ongoing FY rupee did not depreciate but infact appreciated. So his statement is entirely wrong about linking 18% increase this year against depreciation that happened 2 years ago.

2) Income tax has registered a growth of 55% from 34b last year to 55b this year which is the highest growth in any category, the tax returns filed this year has reached 3 million as compared to around 1.2m in 2018. Tax base has significyntly broadened.

3) Number of registered companies have more than doubled in 2 years.
 
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Zaki

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It is primarily due to oil imports, in my opinion. If oil prices hadn't plummeted in recent months, the gap would have been far bigger.

We must seriously address our energy needs by switching to alternate energy sources wherever possible.

For the time being, let us continue to hope for increased remittances and never increasing exports to finally grow.
 

Zibago

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I agree with this point completely regarding our diaspora. Those who are left in Pakistan are true MUJAHIDS and sons of the soil, their sacrifices and patience will be rewarded very soon.
Lol if that keeps you happy
Not just establishment but for the state of Pakistan as well.
For the very territorial integrity of Pakistan given that the Qatri nani endorsed Karema Baloch
 

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