ISLAMABAD -UNS – Prime Minister Imran Khan on Tuesday expressed satisfaction that Pakistan’s economy has finally headed towards “right direction” as economic reforms have begun bearing fruit.
In a tweet shared on his official Twitter handle, the premier stated that Pakistan’s current account turned positive [into surplus] in October 2019, for the first time after a gap of four years.
“Current account balance was +$99 million in Oct. 2019 [as] compared to -$284 million in Sept. 2019 [and] -$1,280 million in Oct. 2018,” he stated.
In another tweet, he mentioned that for the first four months (Jul-Oct) of the current fiscal year, the current account deficit has fallen by 73.5 per cent as compared to the same period of previous year. He referred to the data of the State Bank of Pakistan (SBP).
“Our exports of goods [and] services in Oct 2019 rose 20% over previous month and 9.6% over Oct 2018,” he said, while congratulating exporters and encouraging them to put more effort for improvement.
Pak economy finally heading in right direction as more of our economic reforms bear fruit: Pak’s current account turned into surplus in Oct 2019, for first time in 4 yrs. Current account balance was +$99 mn in Oct 2019 compared to -$284 mn in Sept 2019 & -$1,280 mn in Oct 2018
In four months (Jul-Oct) of the FY20, the current account recorded a deficit of around $1.47 billion. It was 73.5% lower than the deficit of $5.56 billion in the same period of previous year. The deficit sharply reduced in the last four months reflecting significant improvement on the economy’s external front.
The primary reason of the surprising change in the state’s current account balance was observed as the inflow of foreign currencies surpassed the outflow by $99 million in Oct. due to a notable reduction in imports and firm worker remittances.
A continued reduction in imports due to the implementation of structural reforms like rupee depreciation, high benchmark lending rate and regulatory duty on imports had raised hopes for a further drop in the current account deficit in October.
The latest data released by the State Bank of Pakistan (SBP) showed the government has succeeded in bringing down the current account deficit.
Worker remittances were recorded at $2 billion in October compared to $2.06 billion in October 2018, according to the central bank. The current account deficit had been $284 million in September 2019 and $1.28 billion in October 2018.
The details showed the deficit fell drastically due to sharp decrease in imports, which fell to $14.65 billion from $19bn in the same period last fiscal year. However, exports of goods increased to $8.22 billion compared to $7.9bn in the last fiscal year.
The country’s current account deficit, in the last fiscal year, clocked in at $12.75 billion, down 36 per cent from record-high $19.9 billion in FY18.
Moreover, it has been observed that the trade deficit fell to $6.4 billion compared to $11 billion during the period under review. However, trade of services during the period under review did not show any significant change when compared to same period last fiscal year.
Exports of services during the four months clocked in at $1.749 billion compared to $1.709 billion during last fiscal year. Imports of services, on the other hand, reached to $3.117 billion compared to $3.076 billion in FY18.
The trade deficit in services clocked in at $1.368 billion compared to $1.367 billion in the same period last fiscal year.
During the current fiscal year, rising inflows have helping the government improve its foreign accounts. In the first four months, the FDI jumped by 238 per cent. The equity market is also receiving foreign investment while the government’s security papers have received investment of around $800 million.
Earlier, the SBP Governor Reza Baqir said the fall in current account deficit “is a big achievement for country and is a sign of macroeconomic stability.”