The current account figure for the first quarter of the current fiscal year was a deficit of $594 billion, reversing a small surplus of $110 million in August. This has happened despite remittances from overseas Pakistanis being recorded at $9.54 billion in the first quarter, up 8.4 percent over the previous year’s $8.8 billion. The reason being ascribed is the increased import of food items. This should illustrate why the policy of exporting existing surpluses, as was done with sugar only last year, is shortsighted. The floods have caused doubt to be thrown on the wheat autarky of the country, though the Punjab’s reintroducing of the wheat support price should encourage the sowing of wheat, countering the effects of the floods among farmers.
Apart from that, the need to import food means that the foreign exchange requirements of the country are outside the hands of the government. Luckily for it, the global oil prices are expected to remain about where they are. This may not be comfortable for the government, but it is tolerable. There are clouds on that horizon, though, with the Sindh government about to introduce access of fuel imports, which the Oi Companies Advisory Council says could disrupt the supply chain, and cause nationwide shortages. The reserve position is relatively comfortable, with the gold reserves having reached $5.4 billion without any new purchase, solely because of the increase in its price, and foreign exchange reserves reaching $14.28 billion, up considerably from $10.84 billion at the end of FY25. However, though exports have grown to $7.9 billion from Rs 7.4 billion last year, imports have grown faster,8.3 percent, to $15.4 percent.
Perhaps the government needs to concentrate on IT exports. They have been promising, growing 29 percent year-on-year to $330 million in the first quarter. That is ahead of the 27 percent annually that is needed to achieve the target of $10 billion by 2028.2029. However, there are unpredictable developments in the IT sector about to occur, because of the new US visa regulations. While there is going to be an increase in outsourced work, a lot of it will go to Indian IT professionals who would normally have migrated. The government must come up with innovative solutions, and fast, to make sure that the recovery which has started will continue.
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