Finance minister hopeful of quick economic turnaround

Finance Minister Miftah Ismail confirms talks with IMF moving forward "positively”, terms reduction in current account deficit "good sign"

Business Desk
Federal Minister for Finance and Revenue Miftah Ismail. — Facebook/File
Federal Minister for Finance and Revenue Miftah Ismail. — Facebook/File

  • Finance Minister Miftah Ismail confirms talks with IMF moving forward “positively”.
  • Terms reduction in current account deficit "good sign for external stability."
  • Pakistan’s current account deficit narrows 39% month-on-month.

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) last 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.

Current account deficit narrows 39%

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.

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“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.

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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.

Pakistan-IMF talks

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 government is expected to withdraw energy subsidies and roll back unfunded subsidies to the oil and power sector.

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According to reports, Pakistani authorities would make every effort to urge the IMF's review mission that it should lower the cost of the inflation burden that will impact the population, and may ask for a phased-in approach to subsidy reversal, particularly on petroleum goods.