Anjum Nisar says higher inflows to help liberalize imports, support higher economic growth
\n Islamabad
\nThe Federation of Pakistan Chambers of Commerce & Industry\u2019s Businessmen Panel (BMP) has said that third consecutive month\u2019s current account surplus is fine but challenges remain as the trade deficit is widening, with imports surpassing $5 billion, enhancing risk for external account stability.
\nFPCCI former president and BMP Chairman Mian Anjum Nisar warned that rising energy prices or a slowdown in remittances could strain the country\u2019s external finances.
\nAnjum Nisar said that export earnings rose to $3 billion in December 2024, a 10% year-on-year (YoY) increase, exceeding the monthly average of $2.6 billion over the past year. Meanwhile, imports averaged $4.7 billion, resulting in a $1.7 billion trade deficit for the month.
\nHowever, SBP reported a trade deficit $719 million lower than the Pakistan Bureau of Statistics (PBS). This discrepancy highlights the differing accounting methods used SBP employs a cash-based approach, while PBS uses accrual-based accounting, which includes deferred payment settlements. For 1HFY25, the trade deficit figures reported by SBP and PBS remain close, at $11.5 billion and $11.2 billion, respectively.
\nAnjum Nisar said that the financial account recorded a deficit in December 2024 due to debt repayments to banks. However, fresh loans of $733 million and foreign direct investment (FDI) inflows of $199 million provided partial support. As a result, the overall balance of payments (BoP) showed a minor deficit of $73 million for December.
\nDespite external debt repayments, the cumulative BoP surplus for 1HFY25 stands at $1.7 billion, reflecting resilience, they wrote. This surplus stabilised SBP\u2019s foreign exchange reserves at $11.7 billion, with import cover improving to 2.8 months, the highest in nearly three years.
\nHe said that this positive trend is attributed to improved exports, robust remittances driven by mass human resource migration, moderate international commodity prices, and reduced non-essential imports due to declining purchasing power.
\nFor the first half of fiscal year 2024\u20132025 (1HFY25), the cumulative CA surplus reached $1.2 billion, a sharp contrast to the $1.4 million deficit recorded in the same period last year.
\nExport revenues climbed to $3 billion in December, marking a 10% year-on-year growth and surpassing the monthly average of $2.6 billion over the past year.
\nThe continuous surplus in the current account for October, November, and December 2024 reflects the right direction of economic policies, he stated. The positive indicators reflect growing trust in the government\u2019s economic policies, he said, adding that programmes like \u201cUraan\u201d will further strengthen the economy.
\nHe attributed the surplus to robust remittance inflows, which outpaced the trade deficit, along with a relatively lower services deficit. Revised figures, however, disrupted the streak of monthly surpluses, with the State Bank of Pakistan reporting deficits of $59 million for August and $21 million for September 2024. Despite these adjustments, the cumulative
\nPakistan recorded a net FDI inflow of $170 million in December 2024, down from $219 million in November. However, net FDI inflows for 1HFY25 grew by 20% YoY to $1.3 billion, compared to $1.1 billion in the same period last fiscal year.
\nFor fiscal year 2024\u20132025 (FY25), the SBP projects a CA balance within 0%\u20131% of GDP. JS Global noted that this target is achievable, supported by a balanced trade deficit and steady remittance inflows.
\nExperts attributed the improved CA surplus to better exports, strong remittances, moderate global commodity prices, and curtailed non-essential imports due to reduced purchasing power. He noted, however, that the trade deficit widened in December as imports surpassed $5 billion, underscoring challenges in sustaining external stability.
\nPakistan\u2019s reliance on remittances and global demand for its exports remains a key vulnerability, they remarked. He cautioned that rising energy prices or declining remittances could affect future performance.
\nThe surplus has helped bolster foreign exchange reserves, stabilise the rupee, and enhance investor confidence. Sustaining this momentum will require strategic export diversification, maintaining remittance inflows, and managing imports effectively. Addressing structural vulnerabilities will be crucial for ensuring long-term economic resilience, Najib added.
\nThey said that the federal cabinet, chaired by Prime Minister Shehbaz Sharif, approved revised agreements with 14 Independent Power Producers (IPPs), a move expected to reduce electricity prices by Rs10-11 per unit.
\nThe renegotiated contracts are set to save Rs802 billion by reducing the profits and costs of the IPPs, with an additional Rs35 billion to be deducted from excess profits earned in previous years.
\nThe revised agreements cover 10 IPPs operating under the 2002 power policy and four under the 1994 policy. One of the IPPs from the 1994 policy has had its contract terminated.
\nThe new arrangements are projected to yield a total saving of Rs1.4 trillion over the contract period, translating to Rs137 billion in annual savings for consumers.
\nThey hailed the agreements as a \u201csignificant achievement\u201d that will not only reduce the national circular debt but also bring much-needed relief to electricity consumers.<\/p>\n","protected":false},"excerpt":{"rendered":"
Anjum Nisar says higher inflows to help liberalize imports, support higher economic growth Islamabad The Federation of Pakistan Chambers of Commerce & Industry\u2019s Businessmen Panel (BMP) has said that third consecutive month\u2019s current account surplus is fine but challenges remain as the trade deficit is widening, with imports surpassing $5 billion, enhancing risk for external […]<\/p>\n","protected":false},"author":2,"featured_media":168804,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-456500","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n