The net foreign exchange reserves with the State Bank of Pakistan have now tumbled to below $10 billion, which is not enough to pay for even two months’ imports, and the best way to improve the foreign reserves is to promote foreign direct investment and boost exports.
This was stated by the Acting President of the Islamabad Chamber of Commerce & Industry (ICCI), Jamshaid Akhtar Sheikh, during a meeting with a delegation of the business community. He suggested that the government should offer some special incentives in the upcoming budget to the exporters and foreign investors to boost exports and attract maximum FDI to the country.
Sheikh said that Bangladesh’s exports crossed $43 billion in July-April 2021-22, showing an increase of over 35 percent as compared to the same period last year. However, Pakistan’s overall exports during July-March 2021-22 were just over $28 billion while its total imports during the same period shot up to over $62 billion.
This indicates that imports have increased by $34 billion as compared to exports and this huge gap between exports and imports is the main cause of Pakistan’s dwindling foreign reserves.
The ICCI Acting President said that Pakistan’s overall exports as a percentage of the GDP have also been showing a falling trend for the last many years as they have dipped from over 13 percent of the GDP in 2013 to around 10 percent of it in 2020 while the global average was over 30 percent of GDP in 2013 and over 26 percent in 2020. This means that no serious efforts have been made to boost Pakistan’s exports for the last many years, due to which the economy is now facing multiple challenges.
Sheikh said that the Minister for Finance, Miftah Ismail, has stated that 80 percent of the country’s manufacturing is meant for local consumption and only 20 percent is for exports, which showed that Pakistan’s export volume is much lower than that of other countries. He stressed that the government should fully cooperate with the private sector in the value addition of products and provide maximum support to the exporters in identifying new markets in order to boost exports.
Sheikh mentioned that the total FDI in Pakistan had also fallen by over 57 percent during the first 10 months of the current financial year (July-April) as it came down from $3.6 billion to $1.5 billion during this period, which is not a good sign.
He emphasized that the government should offer some good incentives in the coming budget to the foreign investors so that they could come to invest in Pakistan and produce value-added goods for exports.
This would help to achieve much better results for the country as it is mostly exporting raw materials while other countries are taking advantage by using Pakistani raw materials to produce finished goods that are exported at much higher prices in the international market.
Source: Pro Pakistani