THE trade deficit for the first two months of the fiscal year, July and August, was $2.69 billion, no less than 20.18 percent more than the same period last year, according to the figures reported by the Federal Bureau of Statistics. While exports were recorded at $3.56 billion, up 21.49 percent on the $2.93 billion of last year, imports also recorded a 20.93 percent increase from 5.17 billion to $6.25 billion. Going by the available figures, the year would see a deficit of about $15 billion. However, there are two major factors to be taken into consideration now as a result of the recent monsoon flooding, the worst in the countrys history. They are rice and cotton, the standing crops, which the floods devastated. The first is the countrys second staple as well as an important source of foreign exchange, and the second is not only the engine of Pakistans textile industry, but is also directly exported in good years. It does not need much prescience to estimate that the decreased exports will not be met by decreased imports, but by an increase, as rice is imported to feed people, and raw cotton to keep the mills running, not to increase exports, but to fulfill local demand. Thus there are few signs of relief from the effects of the floods. Flood relief will require larger imports than usual, even if there is little likelihood of there being any increase in exports. The only chance of there being any change in this situation would be if there was to be any decline in the international price of oil, though that too seems unlikely. Another unlikely source of foreign exchange would be if the international community was to honour aid commitments for the floods or make payments due for the 'War on Terror. Another dimension which would help would be the imposition of import controls. However, the present government could not be trusted with this, especially as this would be a rebellion against the prevailing free-market ideology, on the basis of which the country has already obtained loans from international donor agencies. Yet the country needs import controls if the trade deficit is to be controlled.