With 'positive' IMF talks, Miftah Ismail expects economic turnaround soon

ISLAMABAD: Finance Minister Miftah Ismail on Friday said that the talks with the International Monetary Fund (IMF) are underway in a "positive" manner and hoped that the economic situation in the country would improve soon.

The finance minister took to Twitter to share the current account deficit data for April, showing a decline of 39% to $623 million from $1 billion recorded in the previous month.

A Pakistani delegation is holding talks with the Fund in Qatar, seeking the revival of the stalled $6 billion loan programme. Miftah will also travel to Doha on May 24 to participate in the final round of negotiations.

“The current account deficit for April came in at $623 million, less than half the average for the first [nine] months of the fiscal year. This is a very good sign for external stability,” the minister said amid a sharp decline in the rupee value in the currency market due to concerns over the dwindling forex reserves.

Miftah said that with “positive” IMF talks underway, the government is expecting a “turnaround” in the economic situation very soon.

The balance of payments numbers come as the coalition government has sought to increase the size and duration of the IMF loan programme as the foreign exchange reserves of the central bank declined to $10.2 billion during the week ending May 13 which can cover less than two months of imports.

A surging current account deficit amid higher imports is putting pressure on the rupee. The government is expected to withdraw energy subsidies and roll back unfunded subsidies to the oil and power sector.

The government has imposed a ban on the imports of all luxury and non-essential goods in an effort to stabilise the foreign exchange reserves and ease pressure on the currency, as the country faces an economic crisis.

CAD narrows in April

Meanwhile, Pakistan’s current account deficit fell by 39% to $623 million in April from $1 billion the previous month, boosted by a jump in remittances and a decline in imports.

“Current account deficit shrank to $623 million, in April 2022; only two-thirds of March 2022 deficit of $1,015 million. A rise in the workers’ remittances (by $315 million) and a fall in imports (by $246 million) explain this reduction,” the State Bank of Pakistan said in a tweet on Thursday.

April’s current account gap is much smaller than analysts expected, which is a positive sign for the battered economy. Total imports fell by 4% month-on-month to $6.0 billion in April, while exports rose 3% to $3.154 billion. Remittances from the Pakistani citizens employed abroad rose to an all-time monthly high of $3.125 billion in April.

However, the current account deficit reached $13.779 billion in 10 months of this fiscal year, compared with a deficit of $543 million in the same period last year.