Quick Actions Reduced Deficits & Restored Business Confidence: Finance Ministry

The Ministry of Finance has said that the government inherited an economy with a major balance of payments crisis which led to high inflation and low growth, but immediate actions helped stabilize the economy and reduce the unsustainable fiscal and trade deficits, leading to the restoration of business confidence in Pakistan.

In a statement, the Finance Division said that the success of the measures taken by the government to restore and improve the business confidence was evident in the performance indicators which had significantly improved on many fronts.

The statement said the improvement in the business environment can be gauged by the fact that Moody’s Investors Services had upgraded Pakistan’s outlook from ‘negative’ to ‘stable’ in December 2019, reaffirming the country’s rating of B3, whereas, in June 2018, Moody’s had downgraded the outlook to ‘negative’.

Similarly, Pakistan’s ranking in the Ease of Doing index had also moved up by 28 points (108/190) while the World Bank ranked Pakistan among the top 10 reformers in 2019. Likewise, Bloomberg reported that the Pakistan Stock Exchange was the top-performing market in the world in the last three months. PSX benchmark KSE 100-share Index gained 50% in dollar terms since August 2019.

The statement also mentioned the remittances which had increased by 3 percent to $11.4 billion during the Jul-Dec period against $11 billion in the corresponding period last year. Similarly, after 4 years of outflows, net portfolio investment had gone up to $1.4 billion during Jul-Dec FY20 while it was $330 million last year. Besides, FDI during Jul-Nov FY20 had increased by 78 percent to $850 million compared to $477 million in the same period last year.

Among other indicators, exports had increased by 4 percent to $12.3 billion in the Jul-Dec 2019 period versus $11.9 billion in the same period last year. Imports had decreased by 21% to $22 billion in the Jul-Dec period against $28 billion imports in the same period last year.

Current Account Deficit during the Jul-Nov 2019 period had declined by 73% to $1.8 billion (1.6% of GDP) compared to $6.7 billion (5.3% GDP) in the same period last year. SBP’s foreign exchange reserves had increased to $11.5 billion in Dec 2019 from $7.2 billion in June 2019. An increase in the reserves was recorded after debt repayments of $5.3 billion in the Jul-Nov period, including $2.7 billion in interest payments and $2.6 billion in repayment of maturing debt.


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