Quick Actions Reduced Twin Deficits, Restored Business Confidence: Finance Division

The Ministry of Finance has said that the government inherited an economy in a major balance of payment crisis which led to high inflation and low growth but immediate actions by the government helped stabilize the economy and reduce the unsustainable fiscal and trade deficits, leading to the restoration of business confidence. In a statement issued on Wednesday, the Finance Division said that the success of the measures taken by the government to restore and further improve the business confidence was evident in the performance indicators which had significantly improved on many fronts.

The statement said the improvement in the business environment could be gauged by the fact that Moody’s Investors Services had upgraded Pakistan’s outlook from ‘negative’ to ‘stable’ in December 2019, reaffirming the country’s rating of B3, whereas, in June 2018, Moodys had downgraded outlook to ‘negative’. Similarly, Pakistan’s ranking in the Ease of Doing index had also moved higher by 28 points (108/190) while the World Bank ranked Pakistan among the Top 10 reformers in 2019.

Likewise, Bloomberg had showcased Pakistan Stock Exchange as the top-performing market in the world in the last three months. PSX benchmark KSE 100-share Index gained 50% in dollar terms since August 2019. The statement by the Finance Division also mentioned the remittances which had increased by 3 per cent to US$ 11.4 billion during Jul-Dec period as against $ 11 billion in the corresponding period last year.

Similarly, after 4 years of outflow, net portfolio investment had gone up to $ 1.4 billion during the Jul-Dec FY20 while it was $ 330 million in the same period last year. Besides, FDI during Jul-Nov FY20 had increased by 78 per cent to $ 850 million as against $ 477 million in the same period last year. Among the other indicators, exports had increased by 4 per cent to $12.3 billion in the Jul-Dec 2019 period as against $11.9 billion in the same period last year.

The imports had decreased by 21% to $22 billion in Jul-Dec period as against $28 billion imports in the same period last year. Current Account Deficit during the Jul-Nov 2019 period had declined by 73% to $1.8 billion (1.6% of GDP) compared to $ 6.7 billion (5.3% GDP) in the same period last year. SBP FX Reserves had increased to $ 11.5 billion in the Dec 2019 from $ 7.2 billion in June 2019. Increase in SBP FX reserves was marked after debt repayments of $ 5.3bn in Jul-Nov period, including $ 2.7 billion in interest payments and $ 2.6 billion in repayment of maturing debt.