- By: Hoor Babar
- Research Student of MS Economics, Institute of Management Sciences
In the budget, for 2024 25 Pakistan has introduced measures to boost exports focusing on key industries like textiles and agriculture. These steps are part of a strategy to improve the country’s export competitiveness globally addressing the trade deficit and promoting economic growth.
One important aspect of the budget is offering tax rebates to export oriented businesses. By easing the tax burden for these enterprises the government aims to enhance their profitability and encourage production levels, for example businesses in the textile sector. An industry for Pakistan’s exports can now benefit from income tax rates. This initiative is expected to spur investments in the sector increase productivity and ultimately lead to export volumes. The textile industry alone contributes 60% of Pakistan’s exports underscoring its significance in economic progress.
Furthermore the budget includes a reduction in tariffs on materials. This move is particularly beneficial for industries that heavily rely on imported inputs to manufacture goods for export. By lowering raw material costs the government seeks to decrease production expenses making Pakistani products price wise, in global markets. For instance the farming industry, known for exporting a range of goods such, as rice, fruits and vegetables could see advantages from tariffs on fertilizers and crucial supplies. This may lead to an enhancement in both the caliber and volume of exports ultimately boosting Pakistan’s position, in trade.
Export oriented businesses receive support through logistical assistance. The government has dedicated funds to enhance infrastructure, for export related activities, including ports, warehouses and transportation networks. Improved infrastructure plays a role in reducing the time and expenses involved in exporting goods making Pakistani products more appealing to buyers. The budget includes subsidies on freight charges for export items aiming to decrease export expenses.
The budget sets a goal for export growth targeting a boost in exports to $38 billion by the year 2024 25 from the previous years $31.3 billion. This objective relies on the expectation that new incentives will significantly increase export volumes. Achieving this goal would not help narrow the trade deficit of $27.6 billion from year but also strengthen foreign exchange reserves contributing to much needed economic stability. The introduction of these export incentives is essential for meeting the requirements outlined by institutions like the International Monetary Fund (IMF). Pakistan is currently part of a $6.5 billion program, with the IMF that mandates implementing reforms to stabilize the economy. By improving its export capabilities Pakistan can create the currency to fulfill its external debt commitments consequently enhancing its financial credibility and drawing in additional overseas investments.
The strategies detailed in the budget for 2024-25 demonstrate a strategy aimed at increasing exports, through cost reduction boosting competitiveness and backing sectors. These efforts are important to achieve sustainable economic growth and improve Pakistan’s position the global market.