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Express Tribune
5 hours ago
- Business
- Express Tribune
Current account surplus termed historic achievement
Pakistan posted a $1.9 billion current account surplus in July-April 2024-25, reversing a deficit of $1.3 billion in the same period of last year, according to the Economic Survey released by the Ministry of Finance on Monday, which called it a historic achievement, made only once before in FY 2003, when the surplus reached $4.1 billion. At a press conference, Finance Minister Muhammad Aurangzeb commented, "In July-April FY25, we had a current account surplus of $1.9 billion due to improvement in overall exports." The surplus came also on the back of remittances, which hit a historic high in March 2025, and a sharp rise in IT exports, bolstering the external account as the trade balance remained in the red. The report showed that the trade balance in goods recorded a deficit of $21.3 billion ($18 billion last year), fuelled by an 11.8% rise in imports that outpaced export growth of 6.8%. Similarly, the services account deficit widened to $2.5 billion ($2.4 billion last year) as imports grew 9.3%, outpacing export growth of 7.9%. The primary income account deficit rose $803 million to $7.1 billion ($6.3 billion last year) owing to increased dividend repatriation and interest payments. In contrast, remittances hit a historic monthly high of $4.1 billion in March. Overall, remittances grew 31% to $31.2 billion in July-April FY25 against $23.9 billion last year, supported by the government and State Bank-led structural reforms. "Remittances will reach $37-38 billion in this fiscal year. Two years ago, the inflows were around $27 billion," the finance minister remarked. "Some 814,000 accounts have been opened by the Pakistani diaspora under the Roshan Digital Account," he added. Moreover, the financial account recorded a net outflow of $1.6 billion during July-April FY25, a reversal from the net inflow of $4.2 billion last year. The decline was mainly due to higher government debt repayments and a sharp drop in net liability, which fell to negative $3.2 million from $2.6 billion last year, indicating a marked slowdown in external borrowing, the report mentioned. Net foreign direct investment (FDI) amounted to $1,785 million during July-April FY25, slightly down from $1,835 million last year, reflecting a 2.7% decrease. The survey highlighted heightened global risk aversion amid geopolitical tensions and economic uncertainty, alongside a slowdown in global trade and investment flows affecting developing economies, and declining China's outbound investments as key reasons for the drop in the FDI. The current account surplus bolstered foreign exchange reserves to $16.64 billion ($11.50 billion with the State Bank and $5.14 billion with commercial banks) by May 27, 2025, aiding exchange rate stability. The average exchange rate for July-April FY25 was Rs278.72/$. In its review, Arif Habib Limited (AHL) remarked that the current account deficit was projected at a sustainable 0.8% of GDP over the medium term, aided by moderating energy imports, IT export growth and skilled labour remittances. US tariffs on Pakistan As the international community grapples with the effects of Trump's tariffs and their potential economic fallout, the evolving situation poses downside risks alongside opportunities for Pakistan's exports. At present, Pakistan lies at the 33rd position in terms of trade surplus with the US as its exports to Washington amounted to 17% of its total exports. In 2024, exports from the US to Pakistan totalled $2.14 billion while imports stood at $5.47 billion, said the Economic Survey. Considering Pakistan's lower reciprocal tariffs, which make the country a more accessible market for the US, there is a possibility that the country's trade will not be adversely impacted by the US tariffs and it will be able to maintain stable trade ties while larger economies will bear the brunt of economic pressure. Pakistan imposes a lower trade-weighted average tariff on the import of US goods (7.3%) compared to US tariffs on Pakistan's exports (9.9%). Under the Trump administration, the US has levied a 30% additional tariff on Pakistan. However, competitor countries such as Cambodia (49%), Vietnam (46%), China (145% and above) and Bangladesh (37%) face significantly higher tariffs, giving Pakistan an edge. However, India will pay a lower tariff of 27%. In FY24, according to the report, Pakistan imported over $700 million worth of raw cotton, the largest import item from the US. This number is expected to increase further in the ongoing year. By sourcing high-quality cotton from the US and exporting back value-added finished goods, Pakistan has built a mutually beneficial trade cycle. This model not only boosts industrial competitiveness but also strengthens long-term access to the US market. The government is engaged in consultations with the private sector to devise policies that will increase cotton imports from the US, solidifying Pakistan's role as a reliable textile supplier, the report stated, adding that this comparatively open market profile strengthens Pakistan's case for preferential treatment or improved market access. ZOYA MEDINA
Business Recorder
24-05-2025
- Business
- Business Recorder
Pakistan budget 2025-26: expenditure likely to fall by massive Rs2 trillion, says report
Pakistan government is anticipated to unveil a budget outlay of Rs16.9 trillion for the upcoming fiscal year 2025-26, suggesting a notable reduction of 10.6% (or Rs2 trillion) compared to Rs18.9 trillion originally budgeted for FY2024-25, according to a local research house report. Arif Habib Limited's (AHL) report titled 'Pakistan Budget FY26 Preview - budget braces for balance' anticipated a notable reduction in total expenditure (budget outlay) in the wake of a significant cut in mark-up payment on the debt. IMF, govt to continue FY26 budget discussions 'over the coming days' The markup payment on the existing debt is likely to reduce to Rs8.5 trillion in FY26, compared to Rs9.8 trillion originally budgeted for FY25. 'It would be a balanced and a better budget (compared to FY25) considering a significant reducing in cost of borrowing in the wake of halving of the central bank's benchmark policy rate to 11% at present compared to 22% in the previous June,' AHL Head of Research Sana Tawfik said while talking to Business Recorder. The government is scheduled to unveil the budget for FY2025-26 on June 10. The reduction in the estimated expenditures would allow the government to shift its 'focus on fiscal discipline and reforms to stabilise the economy while offering targeted relief,' the report said. The AHL report estimated the overall budget would carry a fiscal deficit of Rs6.2 trillion, while collection of revenue (including non-tax revenue) totaling at Rs17.8 trillion in FY26. The budget deficit is calculated through subtracting provincial transfers estimated at Rs8.04 trillion and estimated provincial budget surplus at Rs950 billion from the gross revenue at Rs17.8 trillion for FY26. Tawfik added 'the other notable measures to be taken to balance the budget would be including tax relieves such as reduction in rate of super tax, rates of income tax for salaried class people, and rationalisation of tax rates on other heads'. The AHL anticipated numbers for the upcoming budget slightly differed with the ones reported in the media citing official sources in recent times. The research house said it projected numbers for the upcoming budget considering lower collection of revenue by the Federal Board of Revenue (FBR) at Rs11.83 trillion in the outgoing fiscal year 2024-25 compared to the one targeted (revised one) by the government at Rs12.37 trillion for the year. AHL report anticipated the markup payment on the existing debt would reduce to Rs8.5 trillion in FY26. The report said the government budgeted collection of revenue by the FBR at Rs14.3 trillion for FY26. The estimated number is based on the likely 'measures including GST [goods and services tax] on petroleum products, tax on retailers and wholesalers, and withdrawing exemptions.' 'The FBR tax to GDP ratio is projected at 11.3% in FY26 compared to 10.3% in FY25.' The government has budgeted current expenditure at Rs 16.2 trillion in FY26 considering decline in markup payments due to a significant reduction in interest rates, according to the report. It calculated the overall budget deficit at Rs6.5 trillion (or 5.1% of GDP). 'The drivers of increase the fiscal deficit would be including rise in current expenditure and decline in non-tax revenue (to Rs3.9 trillion) mainly due to projected reduction in SBP (State Bank of Pakistan) profits.' The research house estimated federal development budget (PSDP/public sector development programme) at Rs1.1 trillion, collection of revenue in petroleum development levy (PDL) at Rs1.4 trillion and SBP profit at Rs1.5 trillion in FY26. It forecasted new tax measures worth Rs869 billion in the budget for FY26 including income tax on retailers and wholesaler, imposition of GST at 3% on petroleum products, and removal of tax exemptions and duty for the Federally Administered Tribal Area (FATA) and the Provincially Administered Tribal Areas (PATA) region, according to the report. 'Budget aligned with IMF [International Monetary Fund] rules, no tax amnesties, resolution of circular debt, and a National Fiscal Pact devolving spending to provinces among other measures.' Construction sector: builders, developers call for 15-year tax policy The report said the government projected economic growth at 3.6% in FY26 compared to estimated 2.68% in FY25. It anticipated average inflation reading would rise to 6.29% in FY26 from 4.63% in FY25, while current account deficit (CAD) to be recorded at $1.5 billion in the next fiscal year starting July 1, 2025 compared to a projected surplus of $1.6 billion in the outgoing fiscal year 2024-25. 'Govt is expected to broaden the tax base through the introduction of new regimes, adjustments in tax rates, and enhanced collection mechanisms. At the same time, the government will try to provide targeted relief to vulnerable segments of society.' 'The budget is likely neutral to positive for the stock market (Pakistan Stock Exchange) and overall economy,' the report said.
Business Recorder
21-05-2025
- Business
- Business Recorder
Pakistan's power generation increases 22% in April
Power generation in Pakistan clocked in at 10,513 GWh in April 2025, an increase of over 22% YoY compared to the same period of the previous year, suggesting an uptick in economic activity. Back in April 2024, power generation stood at 8,639 GWh. 'The 22% increase in power generation, on a yearly basis, is the highest in 48 months,' Rao Aamir, energy analyst at Arif Habib Limited (AHL), told Business Recorder. The surge in energy consumption is attributed to an increased demand, driven by a reduction in tariffs, the analyst said. Net-metering buyback: Does govt want to dim Pakistan's solar glow? On a monthly basis, power generation surged by 25% as compared to 8,409 GWh in March. Despite the increase, generation remained in line with the reference level. However, in the first 10 months of FY25 (July-April), power generation fell by 0.4% YoY to 100,661 GWh compared to 101,088 GWh in the SPLY. 'Power generation is expected to increase in the coming months, due to a demand surge on account of summer months and an uptick in economic activity,' said Aamir. On the other hand, the total cost of generating electricity in Pakistan increased by 8%, clocking in at Rs9.92 KWh in April 2025 compared to Rs9.21 KWh registered in the same period of the previous year. The increase in cost is attributed to the rise in power generation cost from RLNG, which increased to Rs24.26 KWh, a gain of 10%, compared to Rs22.13 KWh in SPLY. In April, hydel emerged as the leading source of power generation, accounting for 21.9% of the generation mix, to become the largest source of electricity generation. This was followed by RLNG, which accounted for 20.5% of the overall generation, ahead of nuclear, which accounted for 17.9% of the power generation share. Among renewables, wind and solar generation amounted to 4.6% and 1.1%, respectively, of the generation mix.
Gulf Today
12-05-2025
- Business
- Gulf Today
Pakistan's stock, international bonds soar after ceasefire with India
"While optimistic, sustaining momentum requires ceasefire compliance, accelerated reforms, and managing global headwinds like oil prices," senior economist Sanie Khan told AFP. Pakistan's stocks closed up 9.4% and its international bonds also recorded strong gains on Monday after a ceasefire deal with neighbouring India agreed over the weekend fuelled a relief rally. Pakistan's main stocks benchmark — the KSE-100 share index — rose 9.6%, to its highest level since April 23, and closed at 9.4%, marking its highest ever gain in terms of points and percentage. The benchmark KSE-100 Index opened at 117,104.11 points, up 9,929.48 points, or 9.26 per cent, prompting an hour-long trading suspension because limits had been reached. "Today's sharp surge in the stock market stems from a powerful convergence of bullish triggers that have swiftly turned investor sentiment from fear to opportunity," Sana Tawfiq, head of research at Arif Habib Limited, Pakistan's largest securities brokerage, told AFP. The country's international bonds rallied sharply, adding as much as 5.7 cents in the dollar, Tradeweb data showed. The jump also comes on the back of the International Monetary Fund (IMF) on Friday approving a Pakistan loan-programme review, unlocking around $1 billion in much-needed funds and greenlighting a new $1.4 billion bailout despite India's objections. "We are very pleased today that the market has performed extremely well," Ahmed Chinoy, director of the Pakistan Stock Exchange Limited, told AFP, while celebrating by cutting a cake with brokers. "This positive shift is reinforced by the IMF's dual approvals, providing both critical funding and international validation of Pakistan's reform path," Tawfiq added. Saturday's ceasefire in the region, announced by US President Donald Trump, followed four days of fighting and diplomacy and pressure from Washington. "After four days of tense clashes that pushed India and Pakistan close to war, a ceasefire appears to be holding after being announced on Saturday," said Jim Reid at Deutsche Bank in a note to clients. The gains in stocks came after the exchange halted trading on Monday for an hour, according to an exchange notification. In a research note, Arif Habib Limited said that while a ceasefire and diplomatic progress have boosted optimism, unforeseen escalations remained a risk. The US president pledging support for resolving the Kashmir issue and encouraging enhanced trade relations between India and Pakistan, the IMF's nod on Pakistan, as well as the central bank's 100 basis points rate key rate cut last Monday which is "expected to boost equity valuations," should all encourage stability, the note said. In a series of posts on social media, Trump also pledged to increase trade with both nations. A policy rate cut by the country's central bank was also seen as a positive factor boosting equity flows. Agencies
Al Arabiya
12-05-2025
- Business
- Al Arabiya
Pakistan stocks surge after ceasefire with India
Pakistan stocks surged on Monday, with the benchmark index opening nine percent higher after a weekend ceasefire agreement with the country's arch rival India. United States President Donald Trump announced the truce after four days of missile, drone and artillery attacks by India and Pakistan which killed at least 60 people and reached deep into the territory of both countries. The benchmark KSE-100 Index opened at 117,104.11 points, up 9,929.48 points, or by 9.26 percent. 'Today's sharp surge in the stock market stems from a powerful convergence of bullish triggers that have swiftly turned investor sentiment from fear to opportunity,' Sana Tawfiq, head of research at Arif Habib Limited, Pakistan's largest securities brokerage, told AFP. The jump also came after the International Monetary Fund (IMF) on Friday approved a loan program review for Pakistan, unlocking around $1 billion in much-needed funds and greenlighting a new $1.4 billion bailout despite India's objections. 'This positive shift is reinforced by the IMF's dual approvals, providing both critical funding and international validation of Pakistan's reform path,' Tawfiq added. Trump, in a series of posts on social media announcing the ceasefire mediated by the US, pledged to increase trade 'substantially' with both nations. 'While optimistic, sustaining momentum requires ceasefire compliance, accelerated reforms, and managing global headwinds like oil prices,' senior economist Sanie Khan told AFP. A policy rate cut by the country's central bank was also seen as a positive factor boosting equity flows.
