Foreign debt liability

Despite the steep fall of 27.77 percent during the past 11 months in merchandise account, Pakistan would need an external financing of $16.3 billion to meet its external obligations of foreign trade. Sagging exports and the downturn in home remittances because of return of thousands of workers from abroad will increase country’s reliance on acquiring foreign loan to bridge the financing gap in foreign trade. It will further exacerbate the foreign debt servicing problem both in the short term and long term. Currently, foreign debt liability of the country has reached to $90 billion. The viable option is to boost exports of finished high quality products and primary commodities that still enjoy comparative advantage in the global and regional markets. In the budget of outgoing fiscal year zero rated sales tax facility was withdrawn from four export industries of textile, leather products, surgical and sports goods. The trade bodies have repeatedly demanded for the restoration of this facility. Due to lack of export facilitation measures, the foreign market for the export of primary commodities could not be diversified in addition to increasing exports to the existing trading partners. For example, Pakistan’s share in the $2 trillion ‘Halal meat’ market is stagnant at 0.25 percent. Last year, a Malaysian trade delegation had met with meat exporter at Karachi Chamber of Commerce and Industry urging them to increase export of this food commodity to flourishing market of their country. In livestock production, Pakistan is positioned on the fourth slot. By virtue of its strategic geographical location export of Halal meat can be substantially increased to Middle East and South East Asia. Country is well placed to increase the quantum of fruits exports, provided appropriate measures are taken by the government to remove logistic and fiscal bottlenecks. Mango export has declined due to suspension of international flights and closure of borders in the wake of Covid 19-pandemic, rising freight charges and above all contraction of demand in markets of Middle East countries, Europe, the US, the UK, Japan and Australia. Last year, Pakistan exported 130,000 tonnes of mango worth $90 million to these countries. On the contrary, this year Vegetables and Fruits Association fears that not more than 80,000 tonnes of mangoes worth $50 million can be exported to these countries. The country has great potential to get autarky and subsequently produce surplus for exports in oil seeds, raw cotton and raw material for pharmaceutical products. Large scale palm tree plantation can be done on sea coast, production of rape seeds such as mustard, canola, sunflower and Jojoba fruit can be enhanced, provided the political clout of import mafia is done away with and refineries for oil seeds are set up. Likewise, cotton production targets can be easily achieved by fixing minimum support price of raw cotton at Rs.5,500 per 40 kilogram and providing high yield cotton seeds, the crop of which is resistant to disease and climate change impact resistant.