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Friday August 19, 2022

Balance of payment: Textile sector fears losing $1bn exports in July

The textile sector fears export losses worth $1 billion in the first 15 days of July due to gas closure and Eidul Azha holidays

By Our Correspondent
July 02, 2022
Textile sector fears losing $1bn exports in July. Photo: The News/File
Textile sector fears losing $1bn exports in July. Photo: The News/File

KARACHI: The textile sector, fearing export losses worth $1 billion in the first 15 days of July due to gas closure and Eidul Azha holidays, has requested the government to restore supplies to exporting industries.

In a letter to Prime Minister Shehbaz Sharif on Friday, All Pakistan Textile Mills Association (APTMA) said that the textile industry has achieved a new record in terms of exports reaching nearly $20 billion from $12.5 billion just two years ago.

“This fantastic growth was enabled by implementation of Regionally Competitive Energy Tariff (RCET), investment of over $5 billion in expansion and establishment of 100 new textile units resulting in enhanced export capacity of $500 million per month,” APTMA stated.

The textile body told the PM that it was inexplicable that the exporting sector, which has the capacity to deliver over $2 billion in exports per month was being denied energy/gas. As a consequence of these measures, textile exports would be significantly lower, much to the detriment of Pakistan’s economy, it noted.

ATPMA pointed out that gas/RLNG to the industry has been suspended from July 1-8, 2022 followed by Eid holidays starting on July 9-14.

“Shutdown of 15 days will translate to a loss of at least $1 billion and more than 50 percent of output will be lost in this month with the very real risk of losing orders on a permanent basis as well as loss of repeat business due to delays in delivery of orders,” APTMA feared.

It stated that textile exports were expected to increase to $25 billion plus in the coming fiscal year. “If this momentum is lost due to energy supply and cost constraints, Pakistan will be forced to seek additional $6 billion in loans from abroad, which under the circumstances may not even be possible,” it added.

APTMA said that textiles have repeatedly delivered their commitments and proven that they were a viable and long-term solution towards economic stability. Under these circumstances, APTMA requested that the gas/RLNG supply of export-oriented industry should be restored immediately.

Pakistan’s deficit widened to $15.2 billion in 11 months of this fiscal year from $1.2 billion a year earlier. A steeper increase in July-May FY2022 current account deficit was led by a surge in the trade deficit, which rose 58.18 percent to $43.4 billion, amid hefty imports. A spike in global crude oil prices contributed to the rise in the country’s import bill.

Total imports increased 36 percent year-on-year to $65.4 billion in July-May FY2022 mainly due to higher oil imports, SBP data showed. Petroleum imports soared 86 percent to $15.8 billion followed by agriculture and other chemical imports, which stood at $9.7 billion in July-May FY2022, compared with $7.5 billion in the same period of last fiscal year.

Current account gap rose to $1.4 billion in May from $618 million a month ago. It widened by 123 percent year-on-year. The deficit stood at $640 million in May 2021.

Pakistan currently faces a balance of payment crisis, with the International Monetary Fund demanding the government to do more to resume its loan facility. To tackle the situation, the government has been removing subsidies on fuel and power and has jacked up prices of petroleum products, electricity and gas.

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