KARACHI: Pakistan posted a current account surplus of $73 million in September 2020, making it the first quarterly surplus in more than five years, the country’s central bank and experts said on Wednesday.
“In September, the current account posted a surplus for a third successive month,” the State Bank of Pakistan (SBP) said in a statement. “The surplus reached $73 million against a deficit of $278 million a year earlier. As a result, the current account recorded a surplus of $792 million in Q1-FY21, the first quarterly surplus in more than 5 years.”
Previously, the country had recorded a quarterly surplus in the third quarter of fiscal year 2015.
Reacting to the development, Prime Minister Imran Khan declared it as “great news” in a Twitter post, adding that his government was “heading in the right direction finally.”
He continued that the economic achievement was made due to a 29 percent growth in exports and nine percent growth in remittances over the previous month.
Despite the recent upswing in shipments abroad, the SBP data show that the country’s exports suffered a decline of 10.4 percent and stood at $5.35 billion during July-September 2020 as compared to the $5.98 billion during the same period in the last fiscal year (FY20).
The imports also declined by three percent to $10.61 billion, according to the SBP data.
Explaining the current situation, the central bank said that the current account surplus owed to buoyancy in remittances and a broad-based rebound in exports.
“The importance and benefit of current account surplus is that it strengthens the country’s external position,” Muhammad Sohail, CEO of Topline Securities, told Arab News, adding: “If your external position becomes stronger then it strengthens the currency and attracts investment that eventually reduces inflation.”
Pakistan’s external position has strengthened the national currency which has appreciated by more than Rs5 against greenback since May 2020.
“Our national currency is appreciating due to a consistent inflow of remittances — about $2 billion per month for the last four months — lower oil imports, extension in the suspension of debt payment by G-20 and stronger exports outlook due to better performance than peers on the COVID-19 front,” Samiullah Tariq, head of research at the Pakistan Kuwait Investment (PKI), told Arab News.
Some experts, however, give credit to chaning international circumstances, pointing out that Pakistan’s trade partners like the United States and European Union have gradually come out of lockdowns which has also led to greater demand of Pakistani textiles and other products.
“The improvement in the external account is due to the international factors and it has very little, if anything, to do with the domestic policy,” Khurram Hussain, business editor of Dawn newspaper, told Arab News.
The other major factor that contributed to the external account surplus is the growth in remittances due to the international travel restrictions since people now send money to their home countries through banks instead of relatives or friends who cannot do international travel too frequently.
“Both are leading factors that contributed to the current account surplus and have an international relevance,” Hussain added.