Pakistan lost nearly $120 billion to trade discrepancies over a decade

A comprehensive new report by Global Financial Integrity (GFI) has revealed that Pakistan accumulated a massive $119.4 billion trade value gap between 2013 and 2022, signaling significant risks of illicit financial flows (IFFs) and trade-based money laundering.

According to the report, titled "Trade-Related Illicit Financial Flows in the Middle East and North Africa (2013–2022)," Pakistan’s economy loses an average of $11.9 billion annually.

The "value gap" — the difference between what Pakistan reports as trade and what its partners report receiving — serves as a primary indicator for trade misinvoicing. This practice involves the deliberate falsification of the price, quantity, or quality of goods on customs invoices to shift capital illegally across borders.

For Pakistan, this drain on resources is a critical concern. GFI notes that such flows "drain revenues that countries urgently need to finance public services and infrastructure".

The report highlights that countries with high illicit outflows typically invest significantly less in health and education than their counterparts.

The data reveals a distinct split in where these discrepancies occur. Out of the total $119.4 billion cumulative gap, $54.3 billion was linked to trade with advanced economies while $65.1 billion occurred in trade with non-advanced economies or regional partners.

Pakistan ranks among the top economies in the MENA region for absolute trade gaps, trailing only the major oil-exporting hubs of the UAE (~$457 billion) and Saudi Arabia ($320 billion).

To curb these multi-billion dollar leaks, the report urges countries like Pakistan to pursue "multi-pronged reforms," including modernizing Customs by investing in digital monitoring and AI-driven analytics to flag price anomalies in real-time and completing frameworks to identify the real individuals behind companies, preventing the use of anonymous shell firms for capital flight.