By Jawad Ahmed ISLAMABAD, May 18 (INP-WealthPK): After the economy recovered from the Covid-19 pandemic, Pakistan's trade balance is likely to face pressure again due to a large increase in the import bill. Dr Ayyaz Ahmad, a former senior research economist at the Pakistan Institute of Development Economics (PIDE), said while talking to WealthPK that the import of non-essential luxury goods, such as automobiles, jewellery, and cosmetics, must be reduced immediately by increasing import tariffs to cut Pakistan's import bill. “Reducing the import bill immediately is difficult because oil and machinery, which are used to propel the domestic industry, constitute the majority of Pakistan's imports,” he said. After the Covid-19 crisis, increased oil and machinery demand for the industry, as well as food shortages, encouraged the import of these commodity groups, resulting in trade deficit. During this time, the demand for used and new vehicles has also increased significantly. Dr Ayyaz pointed out that the rise in crude oil prices in the international market, as well as supply chain disruptions, contributed significantly to the country's growing import bill. According to the State Bank of Pakistan (SBP) estimates, following the decrease in total import bills in February 2022, almost all commodity import bills increased in March. Food imports increased by 18.4% in March, machinery equipment imports by 14.2%, transportation goods imports by 37%, and petroleum group imports by 24.4%, compared to February FY22.

Foreign Trade (Billion dollars)
Period	Exports	Imports	Trade deficit	Remittances	Imports of vehicles	Imports of food products	Imports of fuel
FY20	22.536	43.645	21.109	23.132	1.512	4.713	9.280
FY21	25.639	54.273	28.634	29.450	2.746	7.247	9.747
FY22 (July-March)	23.699	53.796	30.097	22.952	2.810	6.297	12.664

Source: State Bank of Pakistan/WealthPK research Food insecurity, according to Dr Ayyaz, has become one of the country's primary concerns in recent years. Pakistan spends billions of dollars each year on imports of wheat, sugar, and edible oil. Dr Ayyaz said that food inflation is one of the country's most severe issues, and it is directly or indirectly linked to oil prices. He said any increase in oil prices raises input costs, which is reflected in food prices. Dr Ayyaz underlined the importance of remittance inflows into the country, saying that these inflows help the government minimize the current account deficit. “Lowering the transaction costs and strengthening digital channels for financial transactions might facilitate the country's inflows and discourage illegal methods of transactions,” he added. The economic expert praised the SBP's efforts to encourage overseas Pakistanis to invest in the country through the Roshan Digital Account (RDC) and Naya Pakistan Certificates (NPCs), which have generated billions of dollars. Inflows into the RDC had surpassed $4.17 billion in April 2022, indicating the rising trust of Pakistanis living abroad. Overseas Pakistanis invested nearly 66% of the total, or $2.753 billion in high-return NPCs. Dr Ayyaz also emphasized the country's immense tourism potential to generate billions of dollars in foreign reserves. He urged the government to restore historical sites and construct new tourist destinations to attract foreign tourists.