The good news on the economic front is that Pakistan’s current account surplus for the first four months of the current year totalled 218 million dollars. It is  a great achievement which must be lauded because for years the economy has been burdened with a current account deficit which is the main factor behind our mounting debt burden.

There are many factors behind this welcome development. An important one is a substantial increase in home remittances. Compared to the last year, month-wise this year remittances jumped 47.6 percent in July, 40.56 percent in August, 29.5 percent in September and 23.9 percent in August. The turnaround happened because of the government’s decision to revert to market-driven rupee-dollar parity. This encouraged overseas Pakistanis to send more money through the normal banking channels. The agreement with the IMF also played a role in this context.

At the same time the trade deficit narrowed from 7,387 million dollars in July-October 2023 to 7,083 million dollars in the same period this year. Although imports went up from from 16,977 million dollars July-October 2023 to 17,972 million dollars this year or a rise of 995 million dollars, exports  also rose from 9,590 million dollars during July-October 2023 to 10,889 million dollars in the comparable period this year or a rise of 1,399 million dollars. The third factor driving the current accounts surplus is an increase in Foreign Direct Investment which registered a rise of  32 percent to 904.3 million dollars in July-October 2024 against 683.5 million dollars in the comparable period last year, or a rise of 220.8 million dollars. However, outflows increased by 374.3 million dollars – from 868.2 million dollars July-October 2023 as against 1242.5 million dollars in the same period this year.

The current account is the most important factor in ensuring sustainable economic growth and as such it is necessary to adopt measures to this end. According to experts, remittances and FDI are subject to market fluctuations and exports alone can guarantee stability in a country’s external accounts. As such it is vital that all efforts should be directed towards boosting exports. Federal Finance Minister Muhammad Aurangzeb, while talking to the Dutch Ambassador, reiterated the government’s resolve to move the economy on a path of sustained and export-led growth. Our remittance inflows have surpassed export earnings in the first four months of the current year – 11.848 billion dollars against 10.508 billion dollars. It may be noted here that any decline in remittances and exports is due to flawed government policy.In 2022–23 remittances plunged by 4 billion dollars because of the economically flawed policy to control the rupee-dollar parity that led to multiple exchange rates which, in turn, made the illegal hundi/hawala system attractive to the remitters once again after its cessation during the Covid-19 epidemic.

As things stand today, our export sector suffers from many handicaps including flawed government policies, lack of export competitiveness and diversification and focus on a few traditional low value-adding consumer items. There is also a lack of research and development that accounts for a steady decline in volume of exports. High import duties on raw materials act as export disincentives.

Information technology offers vast opportunities for export growth. The fast evolving global communication technology is providing valuable export revenue to not only firms but also to individuals. Pakistani youths are among the top grossers of IT revenue through freelancing work. But the babus sitting in Islamabad are doing little to encourage our young IT professionals. On the other hand, hurdles are created by slowing down the internet in the name of security. No doubt, the menace of fake news is a global issue,but  the way to effectively tackle it is not to take measures that would cripple a fast-growing export earning sector.

If we want to increase exports, we must create a strong industrial base, something we have neglected for years. At the moment we deal in a few traditional items like textiles and rice. The time has come to diversify the portfolio and move to new fields like auto and engineering industries. Agriculture exports also have unlimited potential which we can easily utilise given the fact that Pakistan is basically an agricultural country which boasts a wide range of agricultural products.By developing agriculture, we can also ensure food security which is going to be a big challenge for the world in coming years. Last but not the least, efforts should be accelerated to explore new markets for our products in Latin America and Africa which have largely remained unexplored.