Pakistan’s current account deficit drops by 86% in February amid import curbs, currency depreciation

This picture taken on January 11, 2023, shows a general view of the Karachi sea port. (AF/File)
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Updated 22 March 2023
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Pakistan’s current account deficit drops by 86% in February amid import curbs, currency depreciation

  • The country posted a deficit of $74 million as compared $519 million recorded last year in February
  • Remittance inflows, weakening currency are among factors that helped improve the deficit situation

KARACHI: Pakistan’s current account deficit (CAD) decreased by 86 percent to $74 million in February, hitting a two-year low due to a recent increase in remittances, import restrictions, and currency depreciation, according to official data and analysts.

The government imposed restrictions to process the import bill as it faced an extreme shortage of dollar liquidity and allowed only limited imports of goods to prevent a massive outflow of the greenback from the country.

According to the State Bank of Pakistan, the country recorded a current account deficit of $74 million last month, down 86 percent from a deficit of $519 million recorded in the same month last year.

The primary reason for the deficit’s decline was a 23.5 percent reduction in the country’s total imports on an annual basis, with total exports and remittances declining by 19 and nine percent during the same period, respectively.

During the eighth month of the current fiscal year, Pakistan’s deficit decreased by 68 percent to $3.9 billion, compared to a deficit of $12.1 billion recorded in the corresponding month last year.

“The $74 million CAD in February 2023 is the lowest monthly deficit since February 2021 due to a surge [by 4.9 percent] in the remittance inflows that supported the external position of the country,” Tahir Abbas, head of research at Arif Habib Limited, told Arab News on Tuesday.

“This is due to the continued impact of import curbs through strong administrative measures and currency depreciation,” he added. “Besides, the slowing economy is also a key reason behind the reduction in deficit.”

Pakistani banks are reportedly hesitant to open letters of credit (LCs) for goods imports, likely due to the government’s restrictive measures to prevent a significant outflow of dollars.

Pakistan’s import bill in February stood at $4.03 billion, according to the Pakistan Bureau of Statistics (PBS), down 17.25 percent from January’s $4.87 billion and 31.08 percent lower than February last year’s $5.85 billion.

Pakistan’s imports during July-February 2022-23 (FY23) totaled $40.12 billion, a 23.51 percent decrease from the corresponding period last year’s $52.45 billion.

PBS data show exports during the same period totaled $18.67 billion, a 9.21 percent decrease from last year’s $20.57 billion.

The import of oil posted a decline of 21 percent YoY in February, and the imports of mogas and high-speed diesel (HSD) decreased by 28 and 33 percent YoY, respectively, amid depressed demand.

Pakistani analysts said the import decline reflected the slowing economy, which was otherwise expected to grow by about one percent during the current fiscal year (FY23), and the depreciation of Pakistan’s national currency, which fell by more than five percent against the dollar in the last month alone.

“We expect that Pakistan’s GDP growth will remain between zero to one percent since demand remains depressed which is also reflected in the overall state of large industries that have posted negative growth,” Samiullah Tariq, research director at Pakistan-Kuwait Investment Company, told Arab News.

The import decline that improved the current account deficit is also attributed to the weakening of Pakistan’s national currency.

On Tuesday, the Pakistani rupee closed a little higher against the greenback at Rs283.92, compared to the previous closing of Rs284.03.

The stock that closed bearish on Tuesday also gained some support from the improving current account deficit number.

“Mid-session support was witnessed due to the upbeat data of $74 million current account deficit in February 2023 which fell by 68 percent on month-on-month basis,” Ahsan Mehanti, CEO of Arif Habib Corporation, said. “However, delays over IMF [International Monetary Fund] staff level agreement on bailout package, industrial closures over foreign exchange worries and political uncertainty played a catalyst role in the bearish close.”

Talks between cash-strapped Pakistan and IMF officials for the completion of the ninth review of a $7 billion bailout program have yet to be completed, despite a lapse of five months.

The completion of the review would pave the way for the disbursement of $1.2 billion from the fund, boosting the country’s foreign exchange reserves, which currently stand at $4.3 billion.


Pakistan PM directs inclusion of business sector input in budget preparation

Updated 9 sec ago
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Pakistan PM directs inclusion of business sector input in budget preparation

  • Shehbaz Sharif chaired a review meeting of the Export Facilitation Scheme to determine how to improve its effectiveness
  • The incumbent government will be presenting its second federal budget in June after assuming political power last year

ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday instructed the government to include suggestions from the industrial and business sectors in the upcoming budget preparation while chairing a meeting to review the country’s exports, his office announced.
The move signals the government’s intent to adopt a more inclusive approach in shaping fiscal policy for the next financial year, as it faces pressure to revive economic growth, attract investment and address concerns from the private sector.
The incumbent government will be presenting its second federal budget in June after assuming power last year.
“Consultation with industries and business organizations should be included in the preparation of the upcoming budget and their suggestions should be incorporated into it,” the PM Office quoted Sharif as saying following the meeting on the Export Facilitation Scheme, a policy initiative by the Federal Board of Revenue simplifying the import of raw materials, machinery and input goods for exporters, with minimal duties and taxes.
“Increasing revenue from exports is a top priority of the government,” he added.
He highlighted the importance of consulting sector experts on the committee’s recommendations to improve the scheme, particularly regarding the import of raw materials and machinery for export industries.
Sharif directed authorities to present a level playing field for local industries, adding that the scheme was launched to reduce production costs and enhance Pakistan’s competitiveness in domestic exports.
The meeting was attended by federal ministers, an adviser to the PM, Pakistan’s tax authority chief and businessmen from the export industry.


Pakistan calls for global action over Israel’s killing of Palestinian emergency workers in Gaza

Updated 23 min 3 sec ago
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Pakistan calls for global action over Israel’s killing of Palestinian emergency workers in Gaza

  • Foreign Office spokesperson Shafqat Ali Khan urges the world to put end to Israeli violations of international law
  • Israel deliberately killed 15 Palestinian emergency workers last month in a shooting incident captured on video

ISLAMABAD: Pakistan urged the international community on Thursday to take notice of Israel’s latest “barbarity” in the Gaza Strip while referring to the killing of 15 Palestinian emergency workers in a shooting incident captured on video.
The emergency workers were shot dead on March 23 and buried in shallow graves. Initially, the Israeli military claimed it opened fire after unmarked vehicles approached its soldiers in the dark, but later changed the statement after video footage emerged showing clearly marked ambulances and fire trucks with their lights on coming under fire.
The war in Gaza, which began in October 2023, has continued despite repeated international appeals for a ceasefire. The Palestinian death toll has reportedly surpassed 50,000, with women and children making up a significant portion of the casualties.
“Pakistan in the strongest possible terms condemns the continued aggression and atrocities committed by Israeli occupation forces in occupied Palestinian territory, particularly in Gaza,” Foreign Office Spokesperson Shafqat Ali Khan said during his weekly media briefing.
“In the latest incidents of brutality, Israel has mercilessly killed 15 Palestinian emergency and civil defense workers,” he continued. “Pakistan demand that the international community should take immediate notice of this barbarity and stop this blatant violation of international law and charter of the United Nations.”

 
Khan highlighted his country’s condemnation of the continued aggression by Israeli forces in Gaza.
Pakistan, which does not recognize Israel, has consistently supported the Palestinian demand for an independent state based on pre-1967 borders.
It has repeatedly raised concerns over the Gaza conflict at various global forums, including the UN Security Council, and has called for a ceasefire and accountability for Israel’s actions.


World Bank investment arm commits $300 million loan to Pakistan’s Reko Diq mining project

Updated 10 April 2025
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World Bank investment arm commits $300 million loan to Pakistan’s Reko Diq mining project

  • Located in Balochistan, Reko Diq is among the world’s largest undeveloped copper and gold reserves
  • IFC says its involvement will mitigate project risks and support sustainable mining practices in Pakistan

KARACHI: The World Bank’s private investment arm, the International Finance Corporation (IFC), will extend $300 million in debt financing for Pakistan’s Reko Diq copper and gold mining project, according to an IFC project disclosure published on Wednesday.
Reko Diq, located in Pakistan’s southwestern Balochistan province, is among the world’s largest undeveloped copper and gold reserves. Once operational, it is expected to significantly boost Pakistan’s exports, generate substantial tax and royalty revenues and contribute to economic growth and job creation.
IFC said its involvement will mitigate project risks in the restive Balochistan region and support sustainable mining practices.
“The estimated total Project cost is $6.6bn, and it will be financed using a combination of debt and equity,” IFC announced while sharing a summary of its investment.
“IFC’s proposed investment consists of an A-loan of up to $300 million,” it added. “Other parallel lenders will provide the remaining debt financing.”
An A-loan is a direct loan provided by the IFC from its own funds, typically with long-term repayments. It is a form of debt financing, requiring the borrower to repay the loan with interest, unlike equity financing where the investor takes ownership stakes in the project.
The Reko Diq project is being supported by IFC’s technical and financial expertise. The institution will act as Environmental and Social (E&S) coordinator, ensuring adherence to its performance standards and helping implement best practices in sustainability.
IFC will also provide advisory support on mining operations, transport infrastructure and risk mitigation.
According to the investment summary document, the project will strengthen domestic supply chains and contribute to community development in Balochistan.
It is also expected to deepen domestic market integration by linking Balochistan to national and global markets and encouraging further investment in Pakistan’s mineral sector.
The IFC has actively engaged with Pakistan recently through several high-level visits and financial commitments. Earlier this year, its Managing Director Makhtar Diop visited the country in February and met with public and private sector stakeholders to expand IFC’s investment footprint and reaffirm its commitment to sustainable and inclusive growth.
Subsequently, the IFC announced plans to significantly increase its investment in Pakistan, with a target of up to $2 billion annually over the next decade, potentially amounting to $20 billion.
The initiative aligns with the World Bank’s Country Partnership Framework, which envisions a combined investment of around $40 billion in Pakistan over ten years.

With input from Reuters
 


Pakistan PM departs for Belarus on two-day visit to boost bilateral cooperation

Updated 10 April 2025
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Pakistan PM departs for Belarus on two-day visit to boost bilateral cooperation

  • The two sides plan to sign several agreements during Sharif’s two-day visit, says Pakistan’s foreign office
  • Visit can also help Pakistan diversify trade partnerships since Belarus can be a gateway to Eurasian markets

ISLAMABAD: Prime Minister Shehbaz Sharif left for a two-day visit to the Eastern European country of Belarus on Thursday, his office said, as the two sides prepare to sign several agreements to strengthen bilateral cooperation.

Pakistan was among the first countries to recognize Belarus after the dissolution of the Soviet Union and has maintained diplomatic relations with it since 1994.

However, bilateral trade has remained modest, with annual volumes ranging between $50 and $65 million, according to the Belarusian embassy in Islamabad.

Belarus mainly exports tractors, trucks, potash fertilizers, synthetic yarns and tires to Pakistan, while Pakistani exports include rice, textiles, leather goods and surgical instruments.

“Prime Minister Muhammad Shehbaz Sharif has departed for a two-day official visit to Belarus,” the PM Office said in a statement. “At the invitation of His Excellency President Aleksandr Lukashenko, Prime Minister Muhammad Shehbaz Sharif will undertake an official visit to Belarus from April 10 to 11, 2025.”

According to another statement released by the foreign office earlier today, Sharif will hold talks with Lukashenko to review progress in areas of mutual interest.
“The two sides are expected to sign several agreements to further strengthen cooperation,” it added.
The prime minister’s visit follows a series of bilateral engagements in recent months. The Belarusian president visited Pakistan last November for his third official trip to the country, during which both sides signed a “Roadmap for Comprehensive Cooperation for 2025-2027” to expand economic ties and institutional linkages.
Fourteen other agreements and memorandums of understanding were also inked, covering cooperation in environmental protection, disaster management, halal trade and science and technology.
For Pakistan, closer ties with Belarus offer several strategic advantages that include diversifying trade partnerships beyond traditional markets, enhancing defense collaboration through access to Belarusian technology and tapping into regional connectivity opportunities, with Belarus serving as a potential gateway to Eurasian markets.
The partnership also complements Pakistan’s broader goals, such as the development of an export-oriented economy.


UAE to grant 100,000 Pakistanis five-year visas this year – Sindh governor’s office

Updated 10 April 2025
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UAE to grant 100,000 Pakistanis five-year visas this year – Sindh governor’s office

  • Official statement quotes the UAE envoy mentioning the number of these visas his country plans to issue
  • UAE consulate confirmed this week Pakistani citizens can apply for work, medical and other types of visas

KARACHI: The United Arab Emirates plans to issue five-year visas to 100,000 Pakistanis this year, according to an official statement released by authorities in Pakistan’s Sindh province on Wednesday, following a visit by Governor Kamran Khan Tessori to the UAE consulate in Karachi.
The governor’s office and UAE authorities in Pakistan said this week all visa-related issues between the two countries had been resolved, and Pakistani nationals could now apply for five-year visas to the Emirates.
The development came amid widespread reports in recent months of a decline in visa approvals for Pakistanis, allegedly due to violations of local laws and customs, as well as political sloganeering while abroad.
Tessori visited the UAE consulate in Karachi on the invitation of UAE Ambassador Hamad Obaid Ibrahim Salem Al-Zaabi following a meeting between the two officials in Karachi on Monday.
“The governor of Sindh, Kamran Khan Tessori, was warmly welcomed by the UAE ambassador and consul general during his visit to the UAE consulate,” the Governor House said in a statement.
“The governor toured the visa center at the consulate, where the ambassador briefed him on the facility,” it added. “Ambassador Hamad Obaid Al-Zaabi said 100,000 Pakistanis would be granted five-year visas. The consul general added that applicants would be treated with great respect at the visa center and receive full cooperation.”
Earlier this week on Tuesday, the UAE consulate in Karachi issued a statement on the meeting between Tessori and Al-Zaabi.
“We love Pakistanis very much,” the statement quoted Consul General Bakheet Ateeq Al-Rumaithi as saying. “Every person can apply for a UAE visa … Pakistani citizens can also apply for a UAE visa for work, medical treatment and other needs.”
The UAE is home to more than a million Pakistani expatriates, making it the second-largest overseas Pakistani community globally and a major contributor to remittance inflows to Pakistan.
Policymakers in Pakistan also view the UAE as an ideal export market due to its proximity, which reduces transportation and freight costs and facilitates smoother trade.