Pakistan’s trade deficit widened by $1.4 billion to $10.8 billion in the first quarter of the current fiscal year as imports grew faster than exports.

Pakistan Bureau of Statistics (PBS) data showed that the trade gap increased 15 percent during July-September of FY27 compared with the same period last year. Imports rose $2.2 billion, or 13.2 percent, to $19.2 billion, while exports increased $824 million, or 10.8 percent, to $8.4 billion.

The government has projected goods exports at $34 billion for the current fiscal year, compared with $30.8 billion last year. However, the first-quarter figures show imports growing faster than exports.

Earlier this week, the government told the International Monetary Fund (IMF) that tariff rationalisation under the National Tariff Policy will reduce production costs and improve industrial competitiveness. It also said that the allocation of Rs88 billion for concessional lending to exporters at 4.5 percent will improve liquidity, lower financing costs and support export growth.

The government has previously provided fiscal incentives to exporters, while exports have generally remained between $2.5 billion and $3 billion a month.

Under the trade liberalisation policy, the Commerce Ministry and World Bank had projected a 14 percent rise in exports and a seven percent increase in imports. Exports fell six percent to below $31 billion in the previous fiscal year.

In September, exports rose 16 percent month-on-month to $2.9 billion, an increase of $407 million from August. Imports increased 11.5 percent to nearly $6.5 billion, pushing the monthly trade deficit up 8 percent, or $263 million.

Year-on-year, imports rose 11 percent, or $646 million, while exports increased 17.6 percent, or $440 million.

Petroleum imports also added pressure to the import bill. During July-August, crude oil imports rose 40.5 percent in value, while petroleum product imports fell 26 percent. LPG imports increased 47 percent, while LNG imports declined 28.6 percent. Crude oil import quantities rose 13.7 percent, but the value increased by nearly 40 percent, reflecting higher international oil prices.

Authorities expect austerity and energy-conservation measures to reduce domestic consumption and petroleum import demand in the coming months.

Finance Secretary Imdad Ullah Bosal told the National Assembly Standing Committee on Finance last week that the fuel conservation policy will save Rs700 million during the three-month austerity period. At an average price of Rs400 per litre, that amounts to about 1.8 million litres.

The trade gap remains dependent on foreign remittances, while new loans are taken to repay maturing debt.