This is apropos a Business Recorder editorial "Widening C/A deficit" carried by the newspaper on Saturday. It has raised some key points that throw ample light on the state of economy. In its conclusion, however, the editorial has failed to make any out of the box suggestions.
It has, for example, stated, "Pakistan Remittance Initiative has lost its steam and needs to be improved urgently to raise remittances while government should try to negotiate with friendly Middle Eastern countries not to retrench our labour force. In short, authorities of the country need to work harder on a number of fronts to remove the growing weaknesses in the external sector without any further loss of time."
The state of current account of any country is the real face of its economy. The government must take every possible step towards improving country's C/A. The widening gap between imports and exports will not augur well for the country because the C/A is an important indicator about any economy's health. The C/A on the balance of payments measures the inflow and outflow of goods, services and investment incomes.
Here, one must not lose sight of the fact that Pakistan's economy is vastly different from the US'. In the case of the US, for example, the US buys manufactured clothes and toys from China. But China uses this foreign currency to buy US bonds. In a nutshell, there is a flow of money from China to the US through the financial account to finance the purchase of imported goods. Our policymakers are therefore required to strike a delicate balance between exports and imports.