Trade deficit expands 56% in March

Pakistan’s trade deficit widened over 56% in March 2024 because of a sudden increase in imports, underscoring the challenges being faced by the external sector stability that still hinges on administrative controls. Pakistan Bureau of Statistics (PBS) said on Monday that the gap between exports and imports increased 56.3% to $2.2 billion in March over a year ago. In absolute terms, there was an increase of $782 million in the trade deficit, a sum that was larger than the last loan tranche of $706 million. PBS said exports amounted to $2.56 billion in March, higher by just $189 million, or 8%, compared to the same month of last year. On the contrary, imports saw a sharp jump to $4.7 billion, higher by $971 million, or 26%. Pakistan has been keeping a tight control over imports due to the scarcity of foreign exchange reserves. Banks are allowed to open letters of credit (LCs) for imports only to the extent of available liquidity. The central bank is also taking a major pie from exports and remittances to cushion the country’s foreign currency reserves that remain thin at $8 billion despite the International Monetary Fund (IMF) loan programme.