Miftah predicts turnaround in economic situation soon

ISLAMABAD: Federal Minister for Finance and Revenue Minister Miftah Ismail on Friday said the much-anticipated talks with the International Monetary Fund (IMF) are going forward in a "positive" manner, hoping that the economic situation in the country would improve soon.

Taking to his Twitter handle, the finance minister wrote: “With positive IMF talks underway, we expect a turnaround in the economic situation very soon.” Miftah also shared the current account data released by the State Bank of Pakistan (SBP) Thursday night, terming the decline a “good sign for external stability”.

“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,” he wrote.

According to data released by the central bank, Pakistan’s current account deficit — the gap between foreign expenditures and income — narrowed 39% month-on-month to $623 million in April on the back of historic high workers’ remittances and a reduction in the import bill.

“Current account deficit shrank to $623 million in April 2022; only two-thirds of March 2022 deficit of $1,015 million,” the central bank said on its official Twitter handle late on Thursday. The SBP cited a rise in workers’ remittances (by $315 million) and fall in imports (by $246 million) as reasons behind this reduction.

The data showed that the export earnings improved from $83 million to $3.15 billion in the month under review compared to $3.07 billion in the previous month. Workers’ remittances hit a historic high at $3.12 billion in April compared to $2.81 billion in the previous month.

Imports of goods shrank to $6 billion in April compared to $6.25 billion in the prior month. However, in the first 10 months (July-April) of the current fiscal year, the cumulative current account deficit soared 27 times to $13.78 billion compared to a mere $543 million in the same period last year. On a month-on-month basis, April is the second consecutive month when the current account deficit has contracted.

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.