Business

Pakistan expects CAD to decline by $2bn, informs IMF of projection

Published

1 year ago

Farwa

Govt expects imports to decline in remaining period of FY24.
Finance ministry expects improvement in overall trade balance.
Pakistan’s external financing requirements stand at $28 billion.

ISLAMABAD: While not moving away from the envisaged macroeconomic framework, Pakistan has communicated to the International Monetary Fund (IMF) that it expects the Current Account Deficit (CAD) to decline by $2 billion to end at $4.5 billion compared to the $6.5 billion projected till the end of June 2024, reported The News on Tuesday.

The downward projection of CAD indicated that the government was expecting that imports would continue to decline in the remaining period of the current fiscal year.

Amid difficulties in materialising the external dollar inflows up to the desired mark, Pakistani authorities have no other option but to reduce the CAD to avert a balance of payment crisis.

Pakistan’s external financing requirements stood at $28 billion — foreign debt servicing of $23.5 billion and CAD projection of $4.5 billion.

After the signing of the IMF agreement under the $3 billion Stand-by Arrangement (SBA) programme, the forex reserves saw an improvement in July 2023, but in the last two months, the pace of external loans and grants has slowed down. Now the authorities are expecting that completion of the first review of the IMF programme would push up the dollar inflows from multilateral and bilateral creditors.

Economist Dr Hafiz A Pasha estimates that the external financing gap may be around $6 to $7 billion for the current fiscal year and the completion of the IMF review would help Islamabad to reduce this gap.

“The current account deficit stood at $0.947 billion in the first quarter of the current fiscal year, so overall the CAD is expected to be restricted at $4.5 billion against earlier projections of $6.5 billion for FY24,” sources told The News on Monday.

These projections have been shared with the visiting IMF’s review mission which is engaged with Pakistani authorities under the $3 billion SBA programme.

The government projects that the exports would be around $30.843 billion while imports would stand at $64.7 billion in the current fiscal year.

The finance ministry’s projections of seeing an improvement in the overall trade balance are based on its hope of increasing exports of rice in the wake of increased production of 2 million tonnes of rice and 5 million additional bales of cotton. However, the sources said that the import bill might be reduced from a projected amount of $64.7 billion to $58 billion for the current fiscal year.

There is another risk that the remittances might also witness a reduction on account of the envisaged target as it might stand at less than $30 billion against the official projection of $32.889 billion for the current fiscal year.

The government expects that the GDP growth rate may hover around 3.5% after improved performance of the agriculture sector and large-scale manufacturing sector growth of around 3%.

The Consumer Price Index (CPI) based inflation is expected to hover around 21% on average in the current fiscal year. The reduction in imports of commodities, improved exchange rate and better supply of goods would help to reduce inflation on a monthly basis in the remaining period of the current fiscal year.

Business

With its second-largest surge ever, PSX approaches 114,000 points.

Published

2 days ago

Farwa

Driven by renewed activity from both private and government financial institutions, the Pakistan Stock Exchange (PSX) saw its second-largest rally in history on Monday.

The market regained many important levels in a single trading session as it rose with previously unheard-of momentum.

Intraday trading saw a top increase of 4,676 points, and the PSX’s benchmark KSE-100 Index gained 4,411 points to settle at 113,924 points. This impressive rebound demonstrated significant investor confidence by reestablishing the 100,000, 111,000, 112,000, and 113,000-point levels.

The market also saw the 114,000-point limit reestablished during the trading session.

The positive tendency was reflected when the market’s heavyweight shares touched its upper circuits. Among the most busiest trading sessions in recent memory, an astounding 85.78 billion shares worth a total of Rs55 billion were exchanged.

Experts credited the spike to heightened institutional investor activity and hope for macroeconomic recovery. Considered a major market recovery, the rally demonstrated the market’s tenacity and development potential.

Business

In interbank trade, the Pakistani rupee beats the US dollar.

Published

1 week ago

Farwa

In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

Business

Phase II of CPEC: China-Pakistan Partnership Enters a New Era

Published

1 week ago

Farwa

The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.