Oil imports increase 6.7pc to $9.6bln in July-February

KARACHI: Oil imports soared 6.7 percent to $9.618 billion in the first eight months of the current fiscal year of 2018/19 as rupee devaluation offset the benefits of price decline in international petroleum prices, although other key imports continued to show downward trend, official data revealed.

Pakistan Bureau of Statistics’ (PBS) latest data showed that oil imports stood at $9.014 billion in the July-February period of last fiscal year.

Oil imports, in quantity terms, saw decrease during the period under review. Imports of petroleum products dipped 35.2 percent to 6.817 million tons in the July-February period, while crude imports slid 11.2 percent to six million tons.

Weaker currency partially offset the decline in energy prices. Oil prices dropped more than 11 percent to $65.81 per barrel in March from $74.18 per barrel in July last year.

The decline would have been positive for Pakistan in terms of foreign trade, but fragile rupee increased oil prices by two percent in rupee terms during the period.

PBS data showed that machinery imports sharply slid 20.5 percent to six billion dollars in the July-February period with power generation machinery witnessing a biggest 50.9 percent drop to $872.5 million amongst all the items in the group. Import of electric machinery also decreased 18 percent to $1.169 billion.

Construction and mining machinery imports fell 22 percent to $187.9 million during the period.

Mirza Ikhtiyar Baig, senior vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), citing the central bank’s data, said private sector credit stood at Rs582 billion in the July-February period, of which Rs470 billion was working capital, which was usually invested in real estate and stock market.

“Only Rs100 billion would be spent on import of plant and machinery,” Baig said. “With 14 percent markup and US dollar hedging at over Rs150, import of plant and machinery is not feasible at all.”

The businessman said the industrialists are reluctant to take out their money and invest in expansion due to unfavourable policies of the government and high handedness of the tax authority.

Analysts said machinery import decline stemmed from completion of early harvest projects under the $60 billion China-Pakistan Economic Corridor framework, lending healing support to otherwise skewed balance of trade.

In July-February, imports of fertiliser, insecticides, plastic materials and medicinal products rose 3.6 percent to $5.887 billion. Food import bill stood at $3.868 billion during the period, down 8.2 percent over the corresponding period a year earlier.

Import of gold, iron and steel scrap and aluminum decreased 2.42 percent to $3.373 billion in the first eight months. Imports under transport group skid 30 percent to $2.025 billion in the July-February period. Import of raw cotton, synthetic fiber and silk, worn clothing and other textile items dropped 10.8 percent to $1.918 billion during the period under review.

In July-February, total imports decreased 6.13 percent to $36.6 billion. Imports slid 12.2 percent year-on-year and 7.1 percent month-on-month in February.

In February, oil imports dropped 16.7 percent year-on-year and 8.9 percent month-on-month to $930.8 million.

Machinery group’s imports fell 14.2 percent year-on-year and inched down 0.31 percent month-on-month to $762 million in February.

Imports under agriculture head were recorded at $638.6 million, down 7.3 percent year-on-year and 3.9 percent month-on-month. Food imports fell 7.8 percent year-on-year and decreased 18.6 percent month-on-month to $404.7 million during the month.

Textile and clothing exports recorded a 2.9 percent year-on-year surge to $1.090 billion in February, taking the eight-month exports to $8.9 billion, up 1.38 percent. On month-on-month basis, textile exports declined 6.63 percent in February.

The Federation of Pakistan Chambers of Commerce and Industry senior vice president said rupee devaluation and reduced duties on imported raw materials would enable overall exports to reach $25 billion till June-end.

An industrialist said exports are largely dependent on imported inputs. “Fluctuation in rupee value and costlier utilities rendered Pakistan’s products uncompetitive in the international markets,” he added, requesting anonymity.