Pakistan posts first current account surplus in over 2 years
Ban on non-essential imports, improved inflow of worker remittances help boost data
Islamabad: Pakistan reported a current account surplus for the first time in almost two and a half years due to an ongoing ban on non-essential imports in a country that’s waiting for the International Monetary Fund to revive a $6.5 billion bailout program.
The current account, which is the broadest measure of trade, was a surplus $654 million in March, according to data from the State Bank of Pakistan. That compares with a reading of $36 million gap in the previous month.
The nation recorded a current account surplus last in November 2020 amid the pandemic curbs.
The latest reading is unlikely to provide a relief to the $350 billion economy that is slowing down sharply as the Washington-based lender deliberates on whether to resume the loan programme.
The IMF wants Pakistan to secure financing support for fiscal year ending June.
Earlier this month, Saudi Arabia and the United Arab Emirates provided financing assurances helping the nation inch closer to the IMF funding and avert a default.
In absence of funding support, Pakistan’s dollar stockpile has declined to less than a month’s worth of imports, restricting its ability to fund overseas purchases and leading to production halts by several industries.
Pakistan’s growth has been revised to 0.5 per cent from 2 per cent for year ending June by the IMF.
Pakistan’s Prime Minister Shehbaz Sharif banned imports of luxury products, including raw materials for assembling mobile phones and manufacturing steel in May last year.
Carmakers and pharma companies have also been impacted by import restrictions.
Imports fell more than 40 per cent to $3.83 billion in March, the lowest since August 2020, while remittances rose to $2.53 billion, 27 per cent higher than a month earlier.
The current account surplus was also in part due to the improved inflow of worker remittances last month, said Mohammed Sohail, chief executive officer at Topline Securities Limited.
The nine-month current account deficit stood at $3.37 billion vs $13 billion from a year ago, the latest data showed.