Pakistan has informed the International Monetary Fund (IMF) that its current account deficit (CAD) may remain below $4.5 billion due to lower-than-expected imports.
The Ministry of Finance notified the lender that CAD may remain in the $4-4.5 billion range for the current fiscal year. The ~$2 billion drop is greater than the $1.5 billion raised through Eurobonds by the government. Pakistan also informed the IMF that it is having difficulty getting external finance in the amount of $6.5 billion for the current fiscal year, reported Express Tribune.
The CAD evaluation weighs the expectation that the government will meet its current year’s export target of $30 billion. Notably, exports increased by 0.7 percent in the first four months (July-October) to $9.6 billion. The catch was imports, which were expected by the Ministry of Finance to be more than $54 billion for the current fiscal year. The latest estimate is $10.4 billion lower than the sum used in the IMF’s July report.
Officials also briefed the IMF that they would be able to achieve economic growth in the range of up to 3.5 percent, with inflation remaining around 21 percent.
The government projected remittances to surpass $30 billion in the current fiscal year, although inflows fell by one-fifth in the first three months of 2023-24.
External finance and high debt servicing costs remain the two weakest links in the ongoing talks.
The government informed the IMF that economic growth may persist in the range of 3-3.5 percent, which was higher than the central bank’s and IMF’s forecasts. Meanwhile, the finance ministry expects economic growth to increase to 5.5 percent in the medium term.
The IMF will give its assessment of GDP growth, CAD, and inflation in the coming days.
