Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr Shahid Rasheed Butt on Monday said the first current account surplus in two years will not help stabilise the currency and the faltering economy. The current account turned to a surplus of 654 million dollars in March against a deficit of 36 million dollars in February. Still, it will not help the economy as it is not a result of exports, remittances or foreign investment, he said.
Shahid Rasheed Butt said in a statement issued here today that the current account recorded its first monthly surplus since November 2020. Still, it has been achieved by reducing imports by 11.25 billion dollars which damaged manufacturing, closure many factories, resulted in massive unemployment, reduced taxes and stoked inflation.
A massive decline in imports affected the economy as large-scale manufacturing declined by 11.4 per cent, exports nosedived, and the overall economy would hardly see half a per cent worth of growth, added. The business leader said that exports of goods in the July-March period declined to $21.09 billion compared to $23.71 billion last year, while exports of services increased by $250m, he informed.
The business leader said that the government is hoping that the current account for the whole year would be around six billion dollars which is still quite a big amount for a country have dismally low foreign exchange reserves, he added. The government is trying to convince the IMF to release the stuck-up tranche of $1.1bn, which may also unlock inflows from other sources, but the deadlock persists.
The current account’s development is not sustainable, as any positive development does not back it. Pakistan has always financed the current account deficit through unsustainable borrowing because it burdened the country with high-interest payments.
A very high balance of payments deficit causes local and foreign investors to lose confidence. Therefore, there is always a risk that investors will remove their investments, causing a big fall in the currency’s value, leading to a decline in living standards and lower confidence in the investors.