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PBC Shoots Down Govt’s Forecast for Current Account Surplus and Remittances

The Pakistan Business Council (PBC) has strongly rebuffed the coalition government’s “unrealistic” claim that the country’s trade balance and remittances would be $3 billion in surplus in the current fiscal year.

PBC revealed the July-December 2022 balance of trade and remittance figures and compared them to Ministry of Finance estimates. “The MOF projection of “FY 23 BOT + Remittances” is based on significant additional import crunching and is optimistic about remittance flows through official channels,” the Council tweeted on Monday.

 

According to the PBC, the balance of trade and remittances is expected to be $4 billion in deficit this fiscal year, contrary to the government’s projection. It went on to say that the government would be unable to keep its import bill below the projected $55.5 billion in FY23 and that it would most likely end up at around $60.5 billion.

Unacceptable unemployment would result from another $15 billion squeezing from the already squeezed first half (July-December).

The Council, on the other hand, is bullish on 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”. From July to December of the fiscal year 2023, Pakistan’s exports totaled $17.8 billion. Pakistan’s trade balance is expected to be $31.5 billion in FY2023, up from $26.5 billion in the government’s forecast.

In terms of remittances, PBC believes the government’s forecast of $29.5 billion in inflows in FY23 is “unrealistic by roughly $2 billion,” and that the actual figure will be $27.5 billion. To avoid default, the country is looking to the International Monetary Fund (IMF) for a critical $1.1 billion tranche. With reserves at a low,nine-year low, Pakistan is aggravating its problems caused by a lack of dollars and rising inflation.

The IMF is going through all of the books and analyzing everything. The premier also jumped in with his two cents on the IMF talks, saying the “government is facing serious financial challenges”.

The PBC expressed concern in its closing remarks that Finance Minister Ishaq Dar will have a difficult task convincing the IMF that the country is ready to implement additional stringent measures, such as raising taxes and gas prices.

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