PRIME Minister Shehbaz Sharif has reasons to express satisfaction over the country achieving a record $729 million current account surplus in November, the highest in a decade. The current account posted a third straight monthly surplus in October, reflecting consistency in the government’s policy to restrict imports. According to the State Bank of Pakistan’s (SBP) data, the country had witnessed a $349 million surplus in October compared to $86 million in September.
This is, indeed, a positive development, which reflects the success of the strategy being followed by the economic managers of the country to overcome major challenges in the realm of economy. A detailed analysis of the data would reveal whether the imports came down as part of the policy to discourage unnecessary imports, which is need of the hour or due to reduction in import of plant, machinery and raw material, which can be an indication of sluggish economic activities. Whatever the reason, the country must move towards the path of sustained stabilization as it cannot afford crippling reliance on foreign debt. It may also be pointed out that this is not the only positive development as other economic indicators are also satisfactory. As pointed out by the Prime Minister, the current account posted a third straight monthly surplus in October, reflecting consistency in the government’s policy to restrict imports. According to the State Bank of Pakistan’s (SBP) data, the country had witnessed a $349 million surplus in October compared to $86 million in September. His argument carries weight that Pakistan’s position in the international economic market will strengthen with a record increase in the current account surplus and that the increase in current account surplus would also increase local and foreign investor confidence in the economy. The success of the Government policies is also evident from the fact that remittances by Overseas Pakistanis rose by 34 per cent to $14.8 billion in the five months through November from a year ago. This encouraging trend was the direct outcome of the crackdown against illegal foreign exchange trade and incentives offered by the central bank for transactions through official channels. This has prompted Bloomberg to point out that rupee had gained 2% this year and is considered “among the best-performing emerging-market currencies”, propelled by the International Monetary Fund (IMF) loan programme and remittances. Pakistan received $11.85 billion remittances during July-Oct, making an average of $2.962 billion per month.
The country received $3.052 billion in October and $2.859 billion in September, showing a higher trend of remittances. Keeping this surge in view, Finance Minister Muhammad Aurangzeb had recently expressed the confidence that the remittances would reach $35 billion in the current year, which will be in sharp contrast to financial year 2024 when there was a decline of 13.3% as compared to preceding year. It was because of increased inflow of foreign exchange that the Government removed restrictions on sending of profit and dividends abroad by companies, which was a serious issue for them. The Pakistan Stock Exchange reached a historic milestone when its index crossed the mark of 116,000 for the first time despite political uncertainties. The country’s foreign exchange reserves have increased to $12 billion despite timely repayments and inflation has dropped to 4%. Mindful of the fact that the business community has a crucial role in creating employment, boostinag domestic exports and fostering economic development, both the Prime Minister and the Finance Minister have frequent interaction with the community underscoring the government’s proactive approach to facilitating a conducive business environment. However, it is also a fact that economic activities will pick up the desired momentum only when the cost of doing business is brought down and a secure environment coupled with continuity is ensured by all stakeholders.
