Miftah hopes for current account surplus in July

ISLAMABAD: Finance Minister Miftah Ismail on Tuesday hoped that Pakistan would post a surplus on the external front this month as imports would likely be lower than exports plus remittances.

In his tweet, the minister said, “imports in Pakistan as of July 25 were $3.758 billion. At this clip, our total imports are likely to be $4.824 billion. This number will be InshaAllah less than our exports plus remittance.”

It should be noted that higher imports and fewer exports remained a major headache for economic planners of the incumbent as well as the previous governments.

This imbalance ballooned the current account deficit (CAD), leading to higher outflow of dollars from the economy compared to inflows, resulting in immense pressure on rupee and the economy.

In the previous fiscal year 2021-22, trade deficit stood at record $48/25 billion on account of a sky-high oil import bill. Exports increased by 25.5 percent to $31.76 billion; nevertheless, much lower than imports, which grew 42 percent to $80 billion.

It widened the gap by over $18 billion, as both exports and remittances were near $63 billion, putting pressure on external accounts. Resultantly, dollar demand skyrocketed for importing products, forcing the rupee to shed its value against greenback.

Economic experts attributed this possible cut in imports in July to banks’ reluctance in opening letters of credit for imports due to interbank dollar shortage, instead of government policies to curb the import bill.