Chairman Businessmen Panel (BMP) and former president FPCCI Mian Anjum Nisar has said that the country has registered a current account surplus of $654 million in March 2023 first time after Nov 2020 and drop in Current Account Deficit at the cost of economic growth not acceptable as there is no benefit of macroeconomic stability at cost of halt in industrial growth.
In a statement issued on here on Sunday, the Chairman BMP said that the current account deficit reduction should be based on growth in exports, resulting into expansion in industrial production as well as employment generation.
Mian Anjum Nisar noted that cumulatively current account deficit declined to $3.4 billion dollars Jul-Mar 2023 against a deficit of $13 billion of same period but this macroeconomic stability has been achieved at the cost of halt in industrial growth and import restrictions which is not acceptable.
Unfortunately the present turnaround is largely due to the fall in imports that has accompanied by sharp slowdown in growth after the currency devaluation and gradual increase in interest rates, which sent shockwaves through the economy.
This transformation from deficit into surplus should have been due to recovery in exports and increase in remittances with the support from policies and administrative initiatives of the government but this is not the fact, unfortunately.
The fact is that the massive decline in imports has slowed down overall economic activities, ultimately hitting the GDP growth rate, the business leader said adding the drop in current account deficit is a big achievement as a sign of macroeconomic stability but it is never beneficial for industrial growth-the real indicator of economic performance and development of a nation.
While this is certainly good news as it would reduce the pressure on the country’s dwindling foreign exchange reserves, yet the surplus for March has been achieved at the cost of four key deteriorating macroeconomic indicators: (i) due to severe exchange rate restrictions, necessitated because of low foreign exchange reserves, that include limitation on advance payments for imports against letters of credit, advance payments up to a certain amount per invoice for import of eligible items.—INP