KARACHI: Pakistan’s external account continues to show positive momentum, recording a second consecutive current account surplus of $119 million in September 2024, bolstered by strong inflows of home remittances and higher exports.
Analysts said that this improvement reflects growing stability in the country’s financial position and highlights the vital role remittances play in supporting Pakistan’s economy.
The State Bank of Pakistan (SBP) reported on Monday that Pakistan recorded a monthly current account surplus of $119 million in September 2024, a significant turnaround from the $218 million deficit in September 2023.
This marks the second consecutive month of surplus, with September’s figure surpassing the $29 million surplus recorded in August 2024. Additionally, it represents the highest surplus since April 2024, signaling ongoing improvements in the country’s external account.
Cumulatively, during the first quarter of this fiscal year (FY25), current account deficit also witnessed a declined of 92 percent. Current account posted a deficit of $98 million in July-Sep of FY25 down from $1.241 billion in same period of last fiscal year.
The country’s exports surged by 16 percent to $14.22 billion in the first quarter of FY25, while remittances saw impressive growth of 39 percent, reaching $8.8 billion during the July-September period. “This significant reduction can be attributed to improved trade balance and increase in workers’ remittances”, analysts said.
Khurram Schehzad an economist said that external account and macro de-risking continues, paving way for further confidence of the global investor and capital-providing community on Pakistan. “We need to continue with structural reforms and make environment more investor-friendly by reducing cost of doing business and push towards ease of doing business”, he added.
As the exports and remittances are gradually increasing and the external account continues to benefit from positive momentum, the SBP has projected lower current account deficit for this fiscal year.Considering the improved factors and anticipated future developments, the SBP in its recent report has projects that the current account deficit will remain within a manageable range of 0-1.0 percent of GDP in FY25.
Additionally, the approval of the $7 billion Extended Fund Facility (EFF) program, along with expected external inflows from multilateral and bilateral creditors, is set to further bolster Pakistan’s external buffers.
Pakistan’s external account position is improving for the past on year, supported by stabilization policies, reforms in exchange companies, and successful completion of the IMF Stand-By Arrangement. The current account deficit narrowed further with increase in exports and remittances, as well as muted growth in imports.The current account deficit fell by 79.7 percent to $0.7 billion or 0.2 percent of GDP in FY24-the lowest in last 13 years.
Copyright Business Recorder, 2024
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