KARACHI: Pakistan's financial experts on Thursday said boosting the country's agricultural output in the wake of a surging trade deficit, due to rising food imports, is the only way to pull it out of its current economic crisis.
According to official data, Pakistan's food import bill stood at $5.98 billion during the first seven months of the current fiscal year. Pakistan's economy is heavily dependent on imports, which are likely to continue to exert pressure on the national currency in the absence of any substantial foreign inflows amid negotiations with the International Monetary Fund.
With just a little over $4 billion in foreign reserves held by its central bank, Islamabad is actively trying to stave off a balance of payments crisis. Pakistan is grappling to contain its currency from depreciating further after it plummeted to record lows against the U.S. dollar over the past couple of months. To add to the country's woes, inflation has surged to decades-high in Pakistan.
Speaking at "Agri Connections 2023" conference organized by the Pakistan Agricultural Coalition (PAC) in Karachi, former governor of Pakistan’s central bank, Saleem Raza, said the country's agriculture sector was not performing well. He added that it remained stagnant at around 2.5% against the 6% target that the country needs.
“The only way out of the current economic crisis to stability is through the development of agriculture,” Raza said as keynote speaker at the event. The former central bank official said he believed the country can overcome its food-based trade deficit within three years.
“If Pakistan's agricultural sector is developed on modern lines, the food trade deficit will be eliminated in three years and production surplus can be achieved in another three years,” he said.
“Agriculture is the only way for Pakistan to address problems like external deficit and declining exports for a lasting solution," Raza added.
He lamented how Pakistan's food imports have continued to rise, adding that the South Asian country neither produces edible oil nor tea. “Our pulse imports are worth more than $600 million, which can be produced in Pakistan,” he added.
Raza said Pakistan's agriculture sector needs a financing of Rs2.7 trillion, recalling how agriculture grew at 4% of Pakistan's GDP from 1970 to 2000. He said Pakistan needed measures similar to the ones taken by the country during the '60s to bring about an agricultural revolution. He added that Pakistan's production per acre is half and lesser than the world average when it comes to many crops.
Speaking at the conference, Arif Nadeem, PAC's chief executive, said the current balance of payments crisis has created the need for significant import substitution and increase in Pakistan's exports.
“Pakistan’s economic growth targets must include 4 percent real GDP growth in agriculture," Nadeem said. "This requires a rise in crop yields to take Pakistan from being a food importer to a food exporter," he added.
Asad Gilani, the secretary of the Board of Investment (BoI) in Pakistan, said the country was losing around $500 million due to lack of mechanization. “We lose 12% to 13% of wheat yields due to lack of mechanization that makes about $200 million dollars in value and we lose about $500 million in post-harvest losses,” he added.
Last week, PAC Strategy Advisor, Kazim Saeed told journalists the annual production of corn, wheat and rice was worth $12 billion. Of these, he said $1 billion a year is lost because of supply chain and storage issues.