Pakistan dollar account records third monthly surplus in last 11 months:

                 

Pakistan's current account is back in the black for the third time since October 2019, the State Bank of Pakistan said Monday.

An important indicator for measuring the health of our economy, the checking account records our dollar transactions with the rest of the world. In the case of Pakistan, it is usually in deficit or loss because it spends more dollars than it earns. According to the latest data, the country posted a $ 424 million surplus in July, a turnaround from a $ 100 million deficit the previous month. The last time a $ 344 million surplus was recorded in May 2020.

All thanks to a record number of remittances the country received in the past month.

Overseas Pakistanis sent home remittances worth $ 2.77 billion in July, which was the highest amount of dollars overseas Pakistanis ever sent back to their families. Another factor that helped improve the current account situation was exports. Exports increased by 19.7% in July, following a 25.5% growth in June. This happened because coronavirus cases declined in Pakistan and many countries like the UAE have started importing from us again.

Reducing the current account deficit has been the biggest problem for the Pakistani government Tehreek-e-Insaf since he took office in August 2018. Given that we spent two dollars for every dollar earned, this was not sustainable as led to a high current account deficit. The country is therefore left with fewer dollars to pay for imports such as oil and foreign service debt, which must be repaid in dollars. Not doing so can lead to a sovereign default. The PTI government faced this problem soon after forming the government. The country's dollar reserves fell to 6 billion rupees within the first six months of the new government's mandate. This was barely enough to pay for two months of imports. The exhaustion of dollar reserves is cause for alarm as it is linked to the gradual devaluation of the rupee. To avoid default and support our dollar reserves, the government of Prime Minister Imran Khan signed a $ 6 billion bailout with the International Monetary Fund to address this challenge. The IMF program has opened more doors for Pakistan as the World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank have also pledged support to the country. According to the IMF, the bailout program was supposed to unlock additional funding of $ 36 billion over the life of this program.

Recently, Pakistan secured another $ 1.4 billion from the IMF to combat the economic impact of the Covid-19 pandemic. The group of 20 rich countries later postponed Pakistan's foreign loan payments to December 2020 so that it could effectively fight the Covid-19.