KARACHI: Pakistan’s oil and food import bills have swelled to $24.8 billion during the current fiscal year due to increasing global commodity prices and weakening national currency, according to official data and analysts.
The oil and food import bills of the South Asian country, which is struggling with a worsening balance-of-payment crisis in the face of declining foreign exchange reserves, rose by 96 percent and 12.3 percent respectively from July 2021 till April 2022.
Pakistan imported oil products worth $17.03 billion during this period, compared to imports worth $8.69 billion during the corresponding period last year. It contributed 26 percent to the country’s overall $65.53 billion imports, according to the Pakistan Bureau of Statistics (PBS).
The food import bill during the period stood at $7.75 billion against the $6.9 billion recorded during the same period last year. The import of palm oil worth over $3 billion alone made up for a major share of the import bill, which surged by 44 percent from July till April.
“The surging global commodity prices are a major reason behind high oil and food prices, mainly due to the Russia-Ukraine war and revival of COVID-19 that have disrupted the supply and demand balance,” Ahsan Mehanti, chief executive officer of the Arif Habib Commodities investment firm, told Arab News on Sunday.
“Inflation triggered by the import of energy and food items at higher prices will continue to persist as long as the rupee does not recover.”
The Pakistani currency continues to hit new lows against the United States (US) dollar as the demand for import payments continues to build pressure on the rupee. On Friday, the rupee hit yet another historic low as the greenback closed at Rs192.53 in the interbank market.
The US dollar has gained 6 percent or Rs10.98 against the rupee since April 16, when it was trading at Rs181.55.
Experts believe the Pakistani currency will recoup some of the lost ground after Islamabad and the International Monetary Fund (IMF) sign a deal for the revival of $6 billion loan program.
“We see the dollar hitting Rs200 mark against the rupee before falling back to around Rs180,” Mehanti said. "We expect the rupee to recover after Pakistan signs a deal with the IMF next week."
Pakistan and the IMF are currently negotiating the country's seventh review under the $6 billion Extended Fund Facility (EFF), which has so far disbursed $3 billion. Islamabad is expected to receive another $1 billion after the completion of the review.
The review has been stalled since the previous government announced in February around $1.7 billion relief in energy prices while deviating from the objectives of the IMF program.
“I am going to talk to the IMF and will find out the solution to the issue amicably,” Miftah Ismail, the Pakistani finance minister, said at a press conference in Islamabad on Sunday.
“The government has no intention to further increase the petroleum prices. The prime minister has refused to burden the people further.”
Pakistan’s imports of machinery also posted an increase by 20.5 percent to $9.5 billion from July till April as compared to $7.9 billion during the same period last year. Imports of telecom equipment jumped by 14 percent to $2.4 billion, while mobile phone imports rose by 7.4 percent to $1.8 billion.
The South Asian nation imported vehicles worth $3.7 billion, which shows over 60 percent growth in 10 months of the current fiscal year.
Pakistan suffered $39.3 billion trade deficit from July till April due to the highest ever imports of $65.53 billion. Experts call for addressing the situation by restricting the import of non-essential and luxurious goods.