Global Rice News

Pakistan Expects Decline in Current Account Deficit, Aims to Improve Trade Balance

Pakistan has informed the International Monetary Fund (IMF) that it anticipates a decline in the Current Account Deficit (CAD) by $2 billion, bringing it to $4.5 billion by the end of June 2024, according to a report by The News. The government is hopeful that imports will continue to decrease in the remaining period of the current fiscal year. This projection is driven by the need to mitigate a balance of payment crisis, as Pakistan faces difficulties in attracting external dollar inflows up to the desired level.

The country’s external financing requirements currently stand at $28 billion, which includes $23.5 billion for foreign debt servicing and a projected CAD of $4.5 billion. Although the forex reserves experienced improvement in July 2023 after signing the IMF agreement, the pace of external loans and grants has since slowed down. Pakistani authorities expect that the completion of the first review of the IMF program will stimulate dollar inflows from multilateral and bilateral creditors, thereby aiding efforts to alleviate the external financing gap.

Economist Dr. Hafiz A Pasha estimates that the external financing gap for the current fiscal year could be approximately $6 to $7 billion, and completing the IMF review would enable Islamabad to narrow this gap. The government aims to restrict the CAD at $4.5 billion for FY24, compared to the earlier projection of $6.5 billion.

The finance ministry envisions an improvement in the overall trade balance and anticipates increased rice exports due to a boost in rice production of 2 million tonnes and an additional 5 million bales of cotton. As a result, the import bill could potentially decrease from the projected $64.7 billion to $58 billion for the current fiscal year.

However, there is a potential risk of reduction in remittances, potentially falling below the official projection of $32.889 billion for the current fiscal year. Furthermore, the government expects a GDP growth rate of around 3.5%, driven by the improved performance of the agricultural sector and a growth of around 3% in the large-scale manufacturing sector. Monthly inflation, based on the Consumer Price Index (CPI), is expected to average around 21% in the current fiscal year. Efforts to reduce inflation include decreased imports of commodities, improved exchange rates, and enhanced product supply.

Source: [Geo News](https://www.geo.tv){:target=”_blank”}