Pakistan reports first current account surplus in over 2 years

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April 19, 2023 8:25 pm

A currency trader counts Pakistani rupee notes as he prepares an exchange of dollars in Islamabad, Pakistan December 11, 2017. REUTERS/Caren Firouz/Files

Islamabad: Pakistan declared a current account surplus for the first time in nearly two and a half years, owing to a continuing ban on non-essential imports in a country that is waiting for the International Monetary Fund to resume a $6.5 billion bailout programme.

According to State Bank of Pakistan figures, the current account, which is the broadest measure of trade, was in excess by $654 million in March, Bloomberg has reported.

This compared to a $36 million gap in the previous month. Despite pandemic restrictions, the country last recorded a current account surplus in November 2020.

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The most recent figure is unlikely to bring respite to the $350 billion economy, which is slowing significantly as the Washington-based lender considers whether to restart the loan programme. The IMF wants Pakistan to secure funding for the fiscal year that ends in June.

Earlier this month, Saudi Arabia and the United Arab Emirates gave financial assurances, bringing the country closer to IMF funding and preventing a default, adds the Bloomberg report.

In the wake of a shortage of finance, Pakistan’s dollar stockpile has shrunk to less than a month’s worth of imports, limiting its capacity to fund overseas acquisitions and forcing some businesses to suspend output. The IMF reduced Pakistan’s growth rate for the fiscal year ending June to 0.5% from 2%.

In May last year, Pakistan’s Prime Minister Shehbaz Sharif prohibited imports of luxury goods, including raw materials for assembling mobile phones and making steel. Import restrictions have also harmed automakers and pharmaceutical firms.

Imports plummeted more than 40% to $3.83 billion in March, the lowest level since August 2020, while remittances increased 27% to $2.53 billion, the highest level since August 2020. According to Mohammed Sohail, chief executive officer of Topline Securities Limited, the current account surplus was boosted in part by an increase in worker remittances last month.

According to the most recent data, the nine-month current account deficit was $3.37 billion, down from $13 billion a year ago.