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Markets

Pakistan reports massive current account surplus of $654mn in March

  • This is the first surplus on a monthly basis since November 2020 when the pandemic brought global economy to a standstill
Published April 19, 2023

Pakistan’s current account posted a massive surplus of $654 million in March 2023 against a (revised) deficit of $36 million in February 2023, reported the State Bank of Pakistan (SBP) on Wednesday.

“Cumulatively, the current account deficit reduced to $3.4 billion in July-March FY23 against a deficit of $13 billion in July-March FY22,” the SBP said in a statement.

This is the first surplus on a monthly basis since November 2020 when the pandemic had brought the global economy to a standstill.

The surplus for March is also in stark comparison to the (revised) deficit for the same month of the previous year when it stood at nearly a billion dollars.

“On a YoY basis, the primary reason behind the surplus was a 36% decline in total imports. However, total exports and remittances also decreased by 20% and 11%, respectively,” said brokerage house Arif Habib in a note.

Pak-Kuwait Investment Company’s Head of Research Samiullah Tariq told Business Recorder that the major reason behind the surplus was a sharp decline in imports.

“Some of the drop was witnessed due to the import restrictions placed by the government while the remaining came due to natural causes,” he said. “On the flipside, remittances and exports fell on a yearly basis.”

Ismail Iqbal Securities Head of Research Fahad Rauf told Business Recorder that the surplus was well in line with market expectations.

“We were expecting it because remittances rose by $500 million in March on year-on-year basis while trade remained restricted,” he said. “The issues with opening letters of credit (LCs) persists and this has capped imports.”

Moreover, there are also restrictions on making foreign payments and companies are unable to repatriate their profits as well which resulted in the surplus, he added.

“In the long run, the surplus is unsustainable because if Pakistan opens its economy, imports will rise and the deficit will return,” he said. “We are an import-oriented nation.”

“To maintain the surplus, we will have to keep the economy choked,” he said.

The current account balance is a key figure for Pakistan’s economy that is battling low level of foreign exchange reserves at the moment. Islamabad is currently engaged in talks with the International Monetary Fund (IMF) for revival of its stalled bailout programme, and moving to secure additional funding to convince the lender that its balance of payments’ position is fully financed.

In this backdrop, a current account surplus is being seen as a positive development.

Finance Minister Ishaq Dar took to Twitter to share the latest figure.

Import and export figures

Export of goods during March 2023 stood at $2.43 billion, while export of services stood at $615 million. Import of goods stood at $3.99 billion, while services amounted to $647 million.

Similarly, for the nine-month period of the ongoing fiscal year, export of goods stood at $21.1 billion, while export of services amount to $5.53 billion. Import of goods were clocked in at $41.5 billion, while services amounted to $5.76 billion, showed SBP data.

Comments

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Tulukan Mairandi Apr 19, 2023 04:21pm
Of course. Nobody is being paid. Servicemen, foreign office personnel, civil servants ... all not paid for at least 2 months!
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Joe Apr 19, 2023 04:49pm
Massive current account surplus...in reality there is a massive economic meltdown in progress! Compliments operation RC!
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Rana Amir Apr 19, 2023 04:54pm
@Tulukan Mairandi, Your analysis is wrong. All were paid You should read above information. Listen Pakistan economy is moving towards import substitution.
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Mian Nawaz Sharifshit Apr 19, 2023 05:13pm
Fudged figures. Dar and his group of fudgers in the FinMin trying to fool donors etc.
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amigo Apr 19, 2023 06:43pm
Good news. Congrats
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Rana Amir Apr 19, 2023 06:47pm
Fact Sheet When few months before I commented that from April Pakistan' s balance of payment will be surplus. It will be 3 billion dollar for three months up to June 2022. No one can believe it. Actually I referred few facts. The Thar coal nuclear energy and hydro power projects will contribute massively plus restrict on imports I will soon share the link of that article and any one can see my comments.
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Az_Iz Apr 19, 2023 06:53pm
It is a painful adjustment. The silver lining is, the country needs to borrow less. It needs to seek less support from friendly countries. Paying your own bills is a lot more respectful. If a country can stand on its own feet, you can be more proud.
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Az_Iz Apr 19, 2023 06:56pm
Exports and remittances in the last three years have gone up by almost $20 billion, from about $50 billion to about $70 billion. It is about time the country starts balancing the books, even in a challenging year.
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AmirSh. Apr 19, 2023 07:02pm
This only happens in Pakistan when there is drastic restrictions on imports. CAS-surplus resulting in closure of factories and industries as they are unable to import raw materials and necessary parts equipments to run their factories or industries. Another feather in the hat of our financial Czar-Ishaq Dar.
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Az_Iz Apr 19, 2023 07:02pm
The textile industry, who received billions of dollars under low interest TERF facility, should increase their exports by $5 billion as projected, instead of seeking more subsidies and coming up with more excuses. That should lessen the need to seek more loans and support from friendly countries.
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Fayaz Khan Apr 19, 2023 07:21pm
It is one good news for pity nation in the last 2 yr! Wish it to be true, could hardly believe
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Abdullah Apr 19, 2023 07:23pm
@Tulukan Mairandi, you seem to be fooling yourself.learn what current account surplus is.
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Fazal Rahem Apr 19, 2023 07:27pm
اَلسَلامُ عَلَيْكُم وَرَحْمَةُ اَللهِ وَبَرَكاتُهُ‎
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Rizwan Apr 19, 2023 07:34pm
@Tulukan Mairandi oh no not this slum rat again
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Abdul Sheikh Apr 19, 2023 08:18pm
Dar is a false pastor or used car salesman.
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Az_Iz Apr 19, 2023 08:22pm
Running CAD is not bad, if money is used for productive projects. When it is used for imports and consumption, then paying it back becomes a problem, and things will only get worse.
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asad ali mughal Apr 19, 2023 08:32pm
AOA SIR,KINDLY INFORM THAT MOVEE APP IS REGISTERED WITH SECP ON GOOGLE
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KhanRA Apr 19, 2023 08:45pm
@Rana Amir, Pakistan is not loving towards import substitution. Industrial growth is negative. Factory owners have no money to expand operations - and expanding operations requires heavy importation of equipment up front since Pakistan doesn’t produce mechanical equipment.
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Dr.fahad Apr 19, 2023 09:47pm
@Rana Amir, he is indian or Pti supporter
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Az_Iz Apr 19, 2023 10:20pm
@Rana Amir, according to an interview by CEO of one multinational company, quite a few companies are procuring some local items. Import substitutions is taking place to an extent, although there is a limit to it.
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KhanRA Apr 19, 2023 10:21pm
@Rana Amir, Even with new power sources, Pakistan will still require fuel imports. The non-Thar power plants built by the Chinese require imported coal. At best, Thar and Hydro will less the rise of future imports, but they will not reduce current imports. And of course we need petrol for our vehicles, which will be more because our government is proposing subsidies for fuel that we cannot pay for. Our export sector is in a slump. The only way we can have a surplus is to restrict imports - and the reduction will be temporary and artificial. Mind you, the whole point of Dar’s experiment with controlling the rupee was to lower the cost of imports - and now our government is restricting imports. A bad policy, now made even more obviously bad!
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KhanRA Apr 19, 2023 10:22pm
@Az_Iz, don’t count exports as rising, you are painting a picture of untruth. Exports have tumbled. Remittances only now have slightly increased because the value of the rupee is so low, and diaspora Pakistanis are sending money to relatives to combat spiraling inflation.
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Az_Iz Apr 19, 2023 11:25pm
@KhanRA, this year, both exports and remittances are down by about 10%. But they will still end up by about $16 billion more than they were three years ago.
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Bapu Apr 19, 2023 11:42pm
Very well done!! When you control/ban unnecessary imports into the country, and apply tariffs on luxury items, you definitely save your hatred-earned money. The next step is to stop smuggling through the afghan border which cost a huge to the country's economy.
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M Imran Apr 20, 2023 12:53am
@AmirSh., but it could be blessing in disguise now industries seeling import substitution and creating local supply line it would benefit pak economy in longrun
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KhanRA Apr 20, 2023 02:36am
@Az_Iz, the economic disaster started as soon as Ishaq Dar came into power, so comparing to 3 years ago isn’t useful - especially since we are seeing massive contractions in business activity in the past few months. It is a better comparison to compare to what exports and remittances were 1 year ago. Also, I don’t know how accurate your $16 billion claim is (any claim by Ishaq Dar should be taken with a spoonful of salt as he makes so many promises that go unfulfilled).
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Az_Iz Apr 20, 2023 08:37am
@KhanRA, three years ago, export of goods and remittances were about $22 billion each. Export of services was about $6 billion. This year export of goods and remittances are likely to be $29 billion each. And export of services are likely to be about $8 billion. All the gains happened in the past three years. This year, there is a slight decline. But compared to three years earlier, there is more money coming into the country. If only, that money was better utilized, instead of spending it on consumption.
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Faisal Muhammad Baloch Apr 20, 2023 03:56pm
@Tulukan Mairandi, that's a news which is no where Pakistan. Please correct your sources.
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Faisal Muhammad Baloch Apr 20, 2023 03:57pm
This cannot go on forever. The economy needs to breath and need to come of the Musharaf era cycle.
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