Good News! Pressure on reserves and currency will ease by June next year if July 2019 trade trend continues – Razak Dawood
- The government is keenly monitoring the efforts by all concerned departments to ensure compliance with the terms of credibility and transparency in transactions; Abdul Razak Dawood.
- China has agreed to allow us (Pakistan) duty-free exports in certain segments worth $1 billion during the ongoing year.
- If July 2019 trend of 14 pc increase in exports continues the current account deficit should come down to $6-7bn by June 2020.
Apart from confronting bellicose and hostile neighbors, Pakistan has to face multiple internal challenges and shortcomings as well and the appalling situation of the country’s economy, perhaps, put forth the unfavorable picture when one just reviews the SBP’s statistics about inflation whether it is SPI, WPI or CPI inflation on the month-on-month basis or year-on-year basis.
The overall grim picture of the economy can’t be curtailed with the improvement in trade data (improving exports and reducing the overall imports) in the first month of the current fiscal year in comparison to the July 2018 indicators.
Putting all precariousness on the back front advisor to the prime minister for commerce, textile, industries and production, and Investment Abdul Razak Dawood when asked by Dawn about the trade options for Pakistan in case the country is blacklisted by Financial Action Task Force (FATF) replied that the government is keenly monitoring the efforts by all concerned departments to ensure the compliance to the terms of credibility and transparency in transactions.
The government intends to utilize the time left until the final report by FATF that is scheduled this October to further strengthen the safeguards, he added to his answer.
When asked about the “exports accelerate to the expected scale after the massive rupee depreciation since PTI assumed power,” the advisor to the prime minister although repudiated the unnecessary expectations for any positive instant results adding that there is always a time lag before the impact of changes drew out.
“I believe the latest trade data reinforces the perception. The impact of rupee depreciation seems now to be kicking in,” he said. Exports have risen by 14 percent and imports have been compressed by 18 percent and if a similar trend continues in the months ahead then by the end of the current fiscal year the pressure will ease on reserves and the currency, Razak Dawood added.
In his reply to a query about the role of China in containing the overall trade imbalance Razak told that China has agreed to allow us (Pakistan) duty-free exports in certain segments worth $1 billion during the ongoing year and we are on track to fully utilize the potential but the spike in domestic demand for yarn and grey cloth didn’t let the country to benefit from the duty-free access.
We intend to renegotiate the offer to get access for some other exportable items instead of yarn and grey cloth, Razak uttered.
Citing the ban of trade with India and declining local produce of cotton about the import options for Pakistan for the cotton, advisor to the prime minister said that government is mindful of the growing need of cotton by textile exporters and working to enhance the local produce of cotton adding that some Central Asian countries can serve as viable alternative to fulfill the demand of cotton.
The twin deficits (current account deficit and trade deficit) are the real miseries attached with the economy and the additional monitoring by the international lender the leakages have to be blocked. The cutback in fiscal deficit must be done on the priority basis over everything else and to avail a better future we need to register, pay taxes fairly, stop smuggling, stop under-invoicing and misdeclaration, he further said in this conversation with Dawn interviewers.
The better tax collection speaks for the improvement in the performance of the tax collection machinery (FBR). Targets are undoubtedly high and we hope and pray they are attained. About the flurry of tax notices by FBR, he said that it is NAB who is more dreadful than FBR and the government has promised to shun the unfair harassment of businessmen by NAB officials with the immediate effect.
About the foreseeable conditions of the economy, Razak Dawood forecasted the fall in the current account deficit to about $6-7 billion by the end of the current fiscal year. “If July 2019 trend of 14 pc increase in exports continues, and we factor in remittances, the current account deficit should come down to $6-7bn by June 2020.”
Do you agree with the hopeful picture of the economy painted by the advisor to the prime minister and technocrat Razak Dawood? Share your thoughts in the comment section below