Govt projection of achieving $3bn current account surplus in FY23 ‘unrealistic’: PBC
The Ministry of Finance’s projection of achieving a surplus current account by the end of the ongoing fiscal year is “unrealistic”, said Pakistan Business Council (PBC) on Monday. The council said the country will likely see a current account deficit of about $4 billion, in comparison to the government’s estimate of achieving a surplus of $3 billion.
PBC, an advocacy platform consisting of Pakistan’s corporates and business groups, shared balance of trade and remittance figures realized during July-December 2022, and compared them with the Ministry of Finance estimates.
The data found that the current account had already hit a deficit of $3.2 billion by the end of the first half of the FY23 and is likely to close at $4 billion deficit by the end of the ongoing fiscal.
PBC also said the government will not be able to curb its import bill to the targeted $55.5 billion in FY23, and it is likely to hit $60.5 billion in FY23.
The council said that the Ministry of Finance’s import predictions for FY23 is “unrealistic on account of Hajj and fuel imports. Crunching further $15 billion from already crunched 1H (July-December) would see intolerable unemployment.”
However, PBC is more upbeat about the country’s exports. It believes the government’s export target to reach $29 billion by end of FY23 is “realistic due to compression of global demand”. Pakistan’s exports reached $17.8 billion on July-December 23.
Pakistan’s balance of trade is expected to reach a deficit of $31.5 billion in FY23, up by about $5 billion in comparison to government’s prediction of $26.5 billion.
As for remittances, PBC found the government’s prediction of collecting $29.5 in inflows in FY23, “unrealistic by about $2 billion”, and said the figure is likely to settle at $27.5 billion.
Pakistan is currently in the midst of a financial crunch with policymakers running from pillar to post to secure additional funds for a country reeling from flood disaster. Authorities in Islamabad and the International Monetary Fund (IMF) are also engaged in discussions over the 9th review of the Extended Fund Facility.
Experts have called for a quick revival of the IMF programme as foreign exchange reserves deplete to a level that covers less than a month of imports.
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