Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr. Shahid Rasheed Butt on Tuesday said the first current account surplus in two years will not help stabilise the currency and the faltering economy. The current account turned to a surplus of 654 million dollars in March against a deficit of 36 million dollars in February but it will not help the economy as it is not a result of exports, remittances or foreign investment, he said.

Shahid Rasheed Butt said in a statement issued here on Tuesday that the current account recorded its first monthly surplus since November 2020 but it has been achieved by reducing imports by 11.25 billion dollars which damaged manufacturing, closure of many factories, resulted in massive unemployment, reduced taxes and stoked inflation.

A massive decline in imports affected the economy as large-scale manufacturing declined by 11.4 percent, exports nosedived and the overall economy would hardly see half a per cent worth of growth, he added. The business leader said that exports of goods in the July-March period declined to $21.09 billion compared to $23.71 billion last year while exports of services increased by $250m, he informed.

The business leader said that the government is hoping that the current account for the whole year would be around six billion dollars which is still quite a big amount for a country have dismally low foreign exchange reserves, he added. The government is making its best efforts to convince the IMF to release the stuck-up tranche of $1.1bn, which may also unlock inflows from other sources, but the deadlock persists.

The current development in the current account is not sustainable, as it is not backed by any positive development. Pakistan has always financed the current account deficit through borrowing which was unsustainable because it burdened the country with high-interest payments. A very high balance of payments deficit causes a loss of confidence in local and foreign investors. Therefore, there is always a risk, that investors will remove their investments causing a big fall in the value of currency that leads to a decline in living standards and lower confidence in the investors.

Credit: Independent News Pakistan: INP