Remittances are pouring in and an aura of confidence in the economy is building up. This is a good omen for attaining sustainability, as the country recorded its highest-ever monthly current account surplus in March, touching $1.195 billion compared to $363 million in the same month last year. This was possible owing to an increased inflow from expatriates, a toned-down trend in imports and a sizeable surge in exports despite all odds.
This has encouraged the central bank to raise the benchmark of reserves to $14 billion from $13 billion, and the coffers are likely to stand smooth with the release of a new tranche of $1.2 billion from the IMF.
There is, however, a flip side too, as foreign exchange reserves declined by $127 million, to $10.57 billion, on the count of external debt repayments. Forex reserves held by commercial banks have come as a real cushion as the State Bank struggles to make ends meet.
Nonetheless, as inflows from expatriates over nine months have jumped 33% to $28 billion from $21 billion in the same period last year, the monetary authority estimates a target of $38 billion for FY25 – a refreshing element in times of global economic turndown in the wake of trade and tariff upheavals.
Likewise, increase in exports by $1.77 billion and in FDI by 14% reaching $1.64 billion during the July-March period compared to $1.44 billion in the same period last year are unprecedented positive trends, and likely to pull the economy out of stagnation.
This hype in remittances and a gradual increase in investments have much to do with the evolving realpolitik realities. Pakistan has, by looking inward, surely done some good work, and has been successful in reaching out to expats as well as big-ticket businesses. T
he response it solicited at the recent minerals conference is a case in point, particularly at a time when investors are on the lookout for new avenues. Yet the progress shall remain half-hearted if stringent structural reforms, especially in terms of taxation across the board and checking of pilferage, are not introduced.
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