Current account surplus: a ray of hope

According to the Prime Minister, the current account deficit was 61 610 million in July 2019, while the same deficit was دس 100 million in June 2020, and this trend indicates that the economy is moving in the right direction. After this statement of the Prime Minister, the Minister of Planning Asad Umar also tainted his tweet and said that the deficit of دو 2 billion left by the PML-N government has been increased to Rs 420 million by the PTI government. According to data collection agency Trading Economics, Pakistan's current account deficit was سا 4.5 billion in 2017, compared to ارب 6.3 billion in 2018, and جمع 3.6 billion in 2019. The dollar was. According to the latest data from the Government of Pakistan's Bureau of Statistics (PBS), in July 2020, the country had a surplus of 2 402 million (میں 400 million) in its current account. This may seem like a sign of improvement, but if these figures are viewed in a larger context, the situation in Pakistan will look different from what Prime Minister Imran Khan claims. A current account is a comparison of imports and exports, like income and expenditure, like any other balance sheet. Deficits or surpluses do not form a definitive view of the economy. It remains to be seen whether the economy is growing. If the country does not develop economically, imports will decline and the current account balance will be in surplus. This will not be a positive sign. At present, there is a consensus that Pakistan's national economic growth rate is less than 2%. A growth rate of 2% may be appropriate for a developed country, but in a country like Pakistan where the inflation rate is 9%, this growth rate does not matter. From July 2019 to July 2020, Pakistan's imports have declined by 1. 1.6 billion. Imports were 23 23 billion in 2019, compared to .4 21.4 billion in 2020). From July 2019 to July 2020 alone, remittances from overseas Pakistanis increased by 6.8%, indicating an increase in remittances. Between June and July this year, overseas Pakistanis' payments increased by six percent, indicating that they are worried about their relatives and sending more and more money, but only between June and July this year. Meanwhile, overseas Pakistani payments have increased by six percent, indicating that they are worried about their relatives and are sending more and more money. Pakistan's exports increased by 6.1 percent and imports declined by 0.7 percent. The main reason for the decline in imports can be attributed to the reduction in Pakistan's spending (austerity) in accordance with the IMF's terms and conditions. Dr. Adeel, a professor of economics at Oxford University, says Pakistan's current account surplus needs to be carefully considered. For your part, the current account deficit or the unnecessary increase or non-increase is not a matter of crying or celebrating. "In fact, they depend on the underlying factors that led to this surplus." In the case of Pakistan, the current account surplus is partly due to falling global oil prices, which has led to a reduction in oil import costs and partly due to a reduction in imports. The decline in imports was due to the economic slowdown as demand for new machinery and equipment is declining.

He said that there are several factors of current account surplus at present, including the effect of delayed devaluation, the announcement of export support package, and assistance to SBP traders. Dr. Adeel Malik says, “At the moment it is very difficult to say why the increase in exports, but it is a positive development. But a long-term increase in exports requires a policy of equal competition. The government needs to pay attention to this. "Remittances are good news for Pakistanis living abroad to send money to their relatives. Sending such a large amount of money to the country in a month is a negation of the predictions about the negative effects of Kwid-19 on remittances globally. It needs to be understood that the current monthly increase in remittances is due to Pakistanis living in European countries and not to those living in the Middle East, Dr. Adeel added: “This needs to be understood. The current monthly increase in remittances is European It is because of Pakistanis living in countries, not because of those living in the Middle East, where Pakistanis living in Saudi Arabia and the Gulf states send money. One reason for this may be that the economic package that has been given in Europe to deal with Covid-19 has also benefited Pakistanis living here.

It seems that the Pakistanis living here have benefited from this economic package, in which they have sent more money than they need to their relatives living in Pakistan. Dr. Adeel Malik, a professor of development macroeconomics at Oxford University, says there is a growing trend behind the remittances for charity work so that people can help their relatives, friends, and loved ones to be present. Get through the financial crisis better. According to him, the volume of remittances of Pakistanis living in Middle Eastern countries remains the same, which is a welcome thing and therefore the overall condition of remittances is positive. "Apart from global factors, if any financial benefits were introduced for remittances, they might have benefited. However, it is difficult to separate all these factors. On the other hand, Dr. Adnan Qadir Khan of the London School of Economics says that the main reason for this surplus or surplus account is the skyrocketing oil prices in the world markets and the temporary remittances of Pakistanis abroad to their relatives. "Apart from the fact that economic and trade activities in the country have shrunk due to Kwid-19, there has also been a decline in imports. So the reasons why there is surplus capital in the current account is certainly a temporary relief, but it is showing a slowdown in economic activity.

The country's economic and trade activity has shrunk due to the Kwid-19, which is why imports are declining, but none of these indicators is good news for the country's economic growth rate. However, in order to get out of the vicious circle in which the Pakistani economy is stuck, it needs to increase its economic growth rate, which is yet to be seen. Dr. Ikram-ul-Haq, an economics analyst in Pakistan, says that the accumulation of surplus money in the current account was not due to an increase in the growth rate but to a decrease in imports. Dr. Ikram-ul-Haq says that if we look at the overall picture of the economy, we can see that the country is going through a recession after the closure of investment after a sharp decline in the economic activities of Kwid-19, and unemployment is rising. ۔ In these circumstances, it is wrong to speak of the hope of improvement and it is premature. How can these people ignore the fact that there is a surplus in the current account for a month when the import of machinery guaranteeing future growth has stopped, and most of all that people are being charged huge utility bills. And the common man is being crushed in the mill of inflation. ' According to Dr. Ikram-ul-Haq, in the last financial year, Pakistan borrowed 13 13 billion, the largest one-year loan in Pakistan's history. "We are borrowing to pay off the debts. We have borrowed 29 29 billion in the last two years, of which 26 26 billion has been taken by the PTI government. Of that, ارب 19 billion was immediately deducted to pay off old overdue debts. The fiscal deficit has reached 8.1% of GDP. At present, the total deficit is Rs 38 trillion. The world is currently going through the epidemic of Quid-19, but the three- to four-month lockdown is rapidly easing in the West with some conditions to restore economic activity. The pace at which the world economy, and especially the Western economies, was growing at a rapid pace before the 19th century, has plummeted. And now, after the lockdown of the Quad-19, these easings have resulted in an increase in economic and trade activity, which has benefited economies like Pakistan, and a slight increase in exports from here.

However, the decline in imports makes it clear that economic activity within the country has not accelerated but the economy is shrinking. Pakistan's total debt has reached 84% of GDP. India will get 87% this year, Britain has got 100%. That's why it's so dangerous to have so much debt. The real problem is the lack of proper repayment arrangements for these loans, ie the lack of proper and efficient taxation system and profitable projects. Therefore, the graph of the revival of economic growth that is being seen all over the world is not being formed in Pakistan at present. Prime Minister Imran Khan's claim that the economy is on the right track is like the wheels of a car turning to climb a high road but the car is still standing. According to Dr. Ikram-ul-Haq, so far no fundamental change has been introduced in the tax system of the country, so how will the financial change come about. There is no doubt that Pakistan is mired in severe economic difficulties due to its history of corruption, spending on loans on non-productive projects, and security concerns. But despite all the negative signals of the time, there is a possibility of Pakistan's economic recovery. Pakistan's gross domestic product (GDP) deficit rose to 87% in 2000 and has greatly improved. According to the research department of the State Bank of India, India's national deficit is going to be 87% of its gross national product. The UK deficit is 100%. But the taxation system is better in these countries. 

However, in the current direction, just as the benefit of the recovery in the global economy seems to be reaching Pakistan, it is not far off that this time China's special assistance will accelerate its recovery journey.