The Pakistan Business Council (PBC) has strongly rebuffed the coalition government’s “unrealistic” claim that its trade balance and remittances would be in surplus to the tune of $3 billion in the ongoing fiscal year.
PBC disclosed the balance of trade and remittance figures realized in July-December 2022 and compared them to Ministry of Finance estimates. “The MOF projection of “FY 23 BOT + Remittances” is premised on very significant further crunching of imports and optimistic on remittance flows through official channels,” the Council tweeted on Monday.
The MOF projection of "FY 23 BOT + Remittances" is premised on very significant further crunching of imports and optimistic on remittance flows through official channels (see chart). @FinMinistryPak pic.twitter.com/jkqGGgIsjE
— The Pakistan Business Council (@ThePBC_Official) February 6, 2023
In contrast to the government’s projection, the balance of trade and remittances is expected to be $4 billion in deficit this fiscal year, according to the PBC. It further said the government would be unable to keep its import bill below the projected $55.5 billion in FY23, and it would likely end up at around $60.5 billion.
Unacceptable unemployment would result from another $15 billion crunching from the previously squashed first half (July-December).
On the other hand, the Council is optimistic about the country’s exports. The government’s export target of $29 billion by the end of FY23, according to PBC, is “feasible due to compression of global demand”. Pakistan’s exports totaled $17.8 billion from July to December of FY2023. Pakistan’s trade balance is expected to be $31.5 billion in FY2023, up about $5 billion from the government’s forecast of $26.5 billion.
In terms of remittances, PBC said the government’s forecast of $29.5 billion in inflows in FY23 is “unrealistic by roughly $2 billion” and that the actual amount is more likely to be $27.5 billion. The country is looking to the International Monetary Fund (IMF) for a critical $1.1 billion tranche to avoid default. With reserves at a nine-year low, Pakistan is aggravating its problems caused by a lack of dollars and rising inflation.
The IMF is combing every book and analyzing everything. The premier also jumped in with his two cents on the IMF talks, saying the “government is facing serious financial challenges”.
In its closing remarks, the PBC voiced its concerns that Finance Minister Ishaq Dar faces a difficult task in convincing the IMF that the country is ready to implement additional stringent measures, such as raising taxes and gas prices.