PakAlumni Worldwide: The Global Social Network

The Global Social Network

Citing significant improvements in Pakistan's current account balance, Pakistan's Finance Minister Dr Abdul Hafeez Shaikh has said that his government would not waste its energy on reviving the currently suspended IMF program that began in 2008, or seek a new IMF bailout, according to a report in Pakistan's Dawn newspaper.

Pakistan's decision follows the latest State Bank report of a current account surplus equivalent to 604 Million USD in the second quarter of 2011.

The surplus is the result of rising exports from Pakistan and growing remittances from Pakistani diaspora, the 7th largest in the world.

Pakistan's exports in the first two months of the current fiscal year (2011-12) surged by 20.26 percent over the corresponding period of last year. Exports during July-August (2011-12) were $4,167 million as compared to the exports of 3,465 million during July- August (2010-11, according to a GeoTV report citing data from Federal Bureau of Statistics (FBS).

According to official data as reported by Reuters, remittances rose 40.45 percent to $1.31 billion in August 2011, compared with $933.06 million in the same period last year.

Pakistan has about $18 billion in foreign exchange reserves, according to Dawn News. It's about 6 months worth of imports at the current rate.

Currency traders reacted negatively to the government's decision to part ways with the IMF as the Pakistani rupee hit its second record low against the dollar in two days on Friday, touching 87.92 before firming to 87.75/78 at the close.

Some analysts believe that the timing of the decision to free itself from the IMF is motivated by the ruling party's desire for more spending on populist programs to impress its voters before the coming elections. This is likely to make the budget deficits worse in the absence of IMF's demands for reforms to cut spending and raise revenues to narrow Pakistan's budget deficits to 4.5% of GDP.

Related Links:

Haq's Musings

Pakistani Diaspora Among the World's Largest

Pakistan's Rising Exports and Remittances

Pakistan Car Sales Up 61%

Pakistan to Swallow IMF's Bitter Medicine

IMF and Pakistan- A Case Study

Pakistan's Economic Performance 2008-2010

Views: 69

Tags: Exports, IMF, Pakistan, Program, Remittances

Comment by Riaz Haq on January 10, 2012 at 5:01pm

Here's Pakistan's report card on balance of payments in Jul-Dec 2011 period as reported by Daily Times:

“Cumulative figure shows that Pakistan’s exports during July-December 2011-12 were $11.241 billion, while in the corresponding period of the last year 2010-11 exports were $10.815 billion, which shows 3.94 percent growth,” TDAP official said. “Imports during July-December 2011-12 were $22.713 billion compared to $19.102 billion during the same period of the year 2010-11, registered a 18.9 percent growth,” it added.

“Pakistan’s exports during December 2011 were valued at $1.854 billion, which was 11.5 percent lower than the level of $2.094 billion during December 2010,” the official said. “Imports during December 2011 were valued at $4.261 billion registering a growth of 13.6 percent over the level of imports valued at $3.751 billion in December 2010,” he said.

According to the State Bank of Pakistan, overseas Pakistani remitted an amount of $6.33 billion in the first half (July–December 2011), showing an impressive growth of 19.54 percent or $1.034 billion compared with $5.291.43 billion received during the same period of last fiscal year (July- December 2010).

The monthly average remittances for July-December 2011 period comes out to $1.054 billion as compared to $881.91 million during the same corresponding period of the last fiscal year, registering an increase of 19.54 percent.

Pakistani currency (Pak rupee) fell to a record low against US dollar owing to the country’s trade deficit.

Rupee slid 0.3 percent, most since December 27, before Federal Bureau of Statistics published trade data for last six months this week.

Rupee is being traded around at Rs 91.00 to Rs 91.50 against a dollar, weakest level at least since 1988. It may fall to 95 by end of June, Standard Chartered’s Ali predicted.

Last week, the governor SBP has informed the Senate Standing Committee on Finance, “the likelihood of a sharper fall in foreign exchange reserves is strong in the second half of 2011-12 due to large repayments of external debt, including $1.2 billion of IMF loan, are due in second half.”

SBP officials agreed with the members that in case foreign inflows were not materialised, reserves might fall by $5 billion from current level. It was informed that pressures on foreign exchange reserves and exchange rate have increased, reserves have declined by $1.2 billion up till December 30 ongoing fiscal year 2011-12. Rupee, against the dollar, has depreciated by 4.4 percent up till December 30. SBP is managing excess volatility in Pak Rupee, but is not going against market fundamentals. Timely realisation of planned official inflows is essential for maintaining comfortable level of reserves.

Inflation is declining but still high, trends in cotton and oil prices are severely affecting the external current account.

Net capital and financial flows are inadequate to finance the current account deficit.

The year-on-year inflation in December 2011 is 9.7 percent, but the full year inflation is expected to remain close to the target of 12 percent.

Country, foreign exchange reserves have again touched to $17 billion and keeping in view the trade trends, Pakistan trade deficit would not go beyond $14.5 billion.\01\11\story_11-1-2012_pg5_1


You need to be a member of PakAlumni Worldwide: The Global Social Network to add comments!

Join PakAlumni Worldwide: The Global Social Network

Big Travel Discounts

Affordable Health Insurance

Pre-Paid Legal

Twitter Feed

    follow me on Twitter

    Sponsored Links

    South Asia Investor Review
    Investor Information Blog

    Haq's Musings
    Riaz Haq's Current Affairs Blog

    Please Bookmark This Page!

    Blog Posts

    Oscar-winning Pakistan Techie Shines in Hollywood

    Academy Award winning Hollywood hits Frozen, Life of Pi and The Golden Compass have one thing in common:  Each used extensive computer-generated imagery (CGI) created by Pakistani-American Mir Zafar Ali who won Oscar Statuettes for "Best Visual Effects" in each of them.…


    Posted by Riaz Haq on April 23, 2014 at 10:35am

    Pakistani-American Dr. Asad Qamar of APPNA Among Highest Paid Doctors in America

    Dr. Asad Qamar, a graduate of Lahore's King Edwards Medical College, received $18.2 million in payments from US Medicare program in 2012, making him the second highest billing doctor in America. Dr. Qamar is a member of APPNA, Association of Physicians of Pakistani Descent in North America. He was a candidate for the presidency of APPNA in… Continue

    Posted by Riaz Haq on April 11, 2014 at 10:37am

    © 2014   Created by Riaz Haq.

    Badges  |  Report an Issue  |  Terms of Service