ISLAMABAD: The Pakistani government said on Saturday that it was expecting the current account deficit to remain below $1 billion in the coming months on the back of a recent import and foreign remittance inflows.
The South Asian nation is struggling to keep its fragile economy afloat amid high inflation and rapidly depleting foreign exchange reserves due to a soaring import bill.
After the rupee continued to sink for over a month, the government last week announced a complete ban on imported cars and non-essential luxury items.
On Friday, the government sharply increased fuel prices for consumers, paving the way to revive a $6 billion bailout package from the International Monetary Fund and stabilize the country’s cratering economy.
“On MoM (month on month) basis the growth in imports of goods is expected to be negative due to the ban on non-essential and luxury items. Moreover, remittances are expected to be around $2.5 billion. Taking these factors into account, the current account will stay well
below $1.0 billion in coming months,” the Ministry of Finance said in a monthly economic update and outlook report.
An economic slowdown is likely in the coming months as the relatively high growth of 5.97 percent in the fiscal year 2022 “may not be sustainable” due to the presence of macroeconomic imbalances.
“The fiscal situation and external sector performance are making it difficult to sustain and (are) impacting the growth outlook in coming year.”
International commodity prices are expected to increase further due to the geo-political situation, including the war in Ukraine — a global supplier of grain and oil.
“Continuing geo-political tensions, high commodity prices and contractionary monetary policy may slow down economic activities in coming months,” the economic outlook report said, adding that the inflation rate is expected to remain double digit.
