Pak Posted $462 Million CAD In January

The State Bank of Pakistan has released the data of external trade and statistics today for the month of January. However, even after exports of goods reached nearly US 3 billion dollars and remittances registered above US 3 billion dollars, it still was not enough to cover the US 420 million dollar deficit for the month of January.

It is certain that the government of Pakistan and the State Bank of Pakistan will now be in a catch-22 situation to either cut the interest rate further or they will have to devalue the currency, which will increase inflation.

Additionally, imports are increasing, and exchange reserves are all falling at a faster pace. There is no doubt that the government did stabilize the economy. However, the real heroes were the caretaker government; they reduced the spending and ensured that Pakistan maintained fiscal discipline.

Moreover, the real issue Pakistan is facing is primary income debt and the import of services, which have increased compared to last fiscal year, especially primary income debt. Pakistan will again require cutting imports to reduce the pressure on exchange reserves, and if Pakistan does not do that, then Pakistan will require borrowing expensive loans, which will create an issue for Pakistan's balance of payments next fiscal year.

Additionally, Pakistan will now be required to increase exports and remittances further to tackle primary income debt and overall imports; otherwise, Pakistan will be forever stuck in the cycle of controlling imports in an administrative way, which will damage Pakistan's economy further.

Pakistan's imports of goods for the month of January are US 5.45 billion dollars, and imports of services are US 1.06 billion dollars. Pakistan registered US 2.94 billion dollars for exports of goods, and the export of services registered US 691 million dollars for the month of January.