ICT exports need policy focus

Forex-starved Pakistan earned $2.6 billion last fiscal year through exports of information and communication technology (ICT) services. And within ten months of this year, ICT exports fetched $2.1bn, according to the State Bank of Pakistan (SBP). Every dollar counts for Pakistan. ICT exports that are part of overall services exports are an important source of forex earnings. They can potentially boost services exports and help reduce the services trade deficit. Pakistan ran a huge $5.4bn services trade deficit in the last fiscal year. The country had to pay $12.9bn in services imports against exports of just $7.1bn. In ten months of the current year, the services trade deficit remained high at $4.7bn. The full-year deficit may easily exceed last year’s $5.4bn. The problem with the services trade deficit is that, unlike the goods trade deficit, it cannot be controlled by restricting imports. Services imports come in ways that are essentially different from goods imports. “Luxury” services imports make up only a fraction of total imports, and most of the services that we import, particularly ICT services, are vital for public and private sector companies both for domestic operations as well as for producing exportable goods and services alike.