ISLAMABAD - The Islamabad Chamber of Commerce and Industry has shown concerns over the dwindling foreign exchange reserves of the country which would create new problems for the economy and force the government to resort once more to foreign borrowing for running the affairs of the country.

Sheikh Amir Waheed, president of Islamabad Chamber of Commerce & Industry, said that Pakistan’s total liquid forex reserves were over $23 billion in 2015-16 that have come down to around $18 billion in March 2018, showing a decrease of over 21pc during this period. He said if net reserves with banks were deducted from this total, the net reserves with SBP were less than $12 billion that were insufficient to foot the imports bill of even few months. He said the dwindling reserves reflected the weakening position of the economy.

He said the main reasons of falling reserves were rising debt servicing and surging trade deficit. He said as per figures of Pakistan’s Bureau of Statistics, Pakistan’s exports during July-Feb 18 were $14.849 billion and imports were $39.099 billion, showing a trade deficit of over $24 billion. He said the rising trade deficit reflected that Pakistan was relying more on imports to meet its needs. He said in 1985-86, Pakistan’s trade deficit was just around $2.5 billion that went up to around $32 billion in 2016-17. It showed that our successive governments have failed to devise a better strategy to cope with trade deficit.

Sheikh Amir Waheed said that Pakistan’s exports after reaching the peak level of $25 billion in 2013-14 have come down to $20 billion in 2016-17. He said one of the major reasons of dwindling exports was that Pakistan was mostly depending on textile products for exports while the share of engineering, high-tech and value added products was increasing in world’s exports. He said that government should re-prioritise its exports basket and cooperate with the private sector in enhancing exports of high-tech and valued added products that would help in improving exports and reducing trade deficit.

Muhammad Naveed, ICCI senior vice president, and Nisar Mirza, vice president, said that instead of depending on foreign borrowing, government should overcome non-developmental expenditures and focus on producing imports-substitutions in the country that was the best approach to reduce trade deficit and enhance forex reserves. They said that government should also focus on diversification of exports markets and products in order to give boost to exports and achieve beneficial results for the economy..