ISLAMABAD — A quick end to Pakistan’s ever-widening international trade gap is unsighted, according to the latest statistics. The present domestic and international situation has made this difficult to happen.

The continued sluggishness of the economy, the drought and water crisis, the rising interest rates, the growing inflationary pressures, the government’s constant resort to utilities to raise tariffs for revenues gathering, the reduced unit prices for Pakistani export goods, the OPEC production cuts and the new rates of imported oil, as well as the latest economic slowdown in US and Japan — the world’s two biggest markets —  is the scenario that leads to me to believe so. On top of it is rising petroleum, cooking oil and tea imports.

Anyway, the bad news is that the country’s trade gap has widened to $1.318 billion — nearly double the government’s hoped for deficit that was projected at $800 million for the whole of the current fiscal — 2001 that ends June 30.

The 9-month — July, 2000 to March 2001, exports have inched up to $6.715 billion, while imports totaled $8.033 billion, widening the trade gap to $1.318 billion. It averages a deficit of $149.44 million a month. In case, it goes on widening at that average rate, the year may end with a gap of $1.757 billion.

Analysts go as far as to project the likely gap at $2.0 billion for the whole year. It is something that the country can ill-afford, keeping in view the acute overall balance of payments problems.

However, at $6.715 billion, the 9-month exports are 8.3 percent higher than the like period of fiscal 2000. Imports, during the same period, rose 7.11 percent to $8.033 billion, from $7.5 billion in the like period of last year.

But, the higher import value is due mainly to increase in oil prices, and textile machinery. Had it been due to larger import of industrial raw materials, the picture would have been different, because that would, ultimately, lead to larger exports and better supply in the domestic market.

Officials of the Ministry of Commerce (MoC), however, describe the 9-month exports as “encouraging.” They claim that their export target for this period was $7.339 billion. It means, the actual exports being $6.715 billion, they say, “91.5 percent of this target has been attained.”

The lower unit prices for Pakistani goods, are one of the key causes of this situation. Then comes the question of the continued low quality of Pakistani exports, while the competitors are constantly improving their own goods, adding to the variety they offer, and keep international trends and changing consumer preferences in mind.

Add to this the effect of widespread reports that a number of Pakistani exporters are deliberately resorting to get their goods under-invoiced so that they can retain part of their forex earnings abroad. It has to do with the declining value of the rupee that is encouraging flight of the capital, as those holding forex wish to hedge themselves against further depreciation of the Pakistani currency.

The fact remains that there has actually been a decline in the unit prices of Pakistani exports, in the wake of a recessionary climate in the global market place. The volume of Pakistani exports of cotton yarn, for instance, rose 5.7 percent this year, but the earnings rose marginally only by 0.37 percent.

However, the Pakistan-specific decline is also as a result of poor quality, lack of variety, ignorance about consumer tastes, or an over-confident behavior of some of the exporters who wish to export what they used to do half a century ago.

There has also been the tendency on the part of Pakistani exporters to quote prices that are lower than their competitors on the basis of a depreciating rupee, rather than the quality or variety of the products.

It means that a 17 percent decline in the value of the rupee over the last 10 months, has resulted in Pakistani exporters helping foreign importers to enjoy windfall gains, with no share for the country.

It brings one to ask the State Bank (SB) whether the policy of floating the rupee, and its adopting a market-driven exchange rate since July, 2000 is working to the advantage of Pakistan? Has it stabilized the currency or put it on a roller-coaster that only moves one way: Down