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Express Tribune
17 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
Arab News
20-05-2025
- Business
- Arab News
Pakistan regulator unveils new measures to strengthen Shariah-compliant market intermediaries
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) is proposing new measures aimed at strengthening the presence and operations of Shariah-compliant intermediaries within the capital market, the regulator said in a statement this week. Pakistan's Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country's entire banking system with Islamic principles by 2027. Following the order, the government and the State Bank have taken several measures ranging from changing laws to issuing sukuk bonds to replace interest-based treasury bills and investment bonds. However, documents seen by Arab News earlier this year showed Pakistan's government had failed to achieve a target set by the central bank to increase the share of Islamic banking deposits in the country by 50 percent by January this year. 'The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors,' the SECP said about the latest proposal. 'The paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so.' Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials, Pakistan's first digital mutual fund aggregator. The platform brings together multiple Asset Management Companies (AMCs) and their mutual funds under one roof. It is a venture of ITMinds Limited, a wholly owned subsidiary of the Central Depository Company of Pakistan (CDC). In order to facilitate Roshan Digital Account (RDA) clients, creating a separate category of Shariah-compliant intermediaries on the websites and mobile apps of Islamic banks would also be explored in coordination with relevant stakeholders, the SECP said.
Business Recorder
20-05-2025
- Business
- Business Recorder
Shariah-Compliant Intermediaries: SECP issues consultation paper
ISLAMABAD: In order to facilitate Roshan Digital Account (RDA) clients, the Securities and Exchange Commission of Pakistan (SECP) has proposed creation of a separate category of Shariah-compliant intermediaries on the websites/mobile apps of Islamic banks. In this regard, the SECP Monday issued a consultation paper proposing measures to promote Shariah-compliant intermediaries in the capital market. The paper is in line with the broader objective of SECP to facilitate the provision of Shariah-compliant services within its regulated sectors. The SECP has also proposed that Shariah-compliant institutional investors under regulatory domain of SECP (such as mutual funds, pension funds, private funds, Takaful operators, window Takaful operators, modarabas, Modaraba Management Companies, NBFCs, etc.) be required to route more of their business through Shariah-compliant brokers in a phased manner. This measure shall not only promote Shariah-compliant brokers but also provide the institutional investors access to greater expertise in Shariah-compliant investments. The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors. In addition, the paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so. Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials. Islamic financial institutions, including Islamic window operations, may be encouraged to utilize Shariah-compliant institutions and intermediaries excluding securities brokers, in instances where they are not obligated to do so. This may include using Takaful services for their insurance needs and Shariah-compliant AMCs for investment purposes, SECP proposals added. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
RDA inflows down 25%, clock in at $177mn in April 2025
Inflows through the Roshan Digital Account (RDA) clocked in at $177 million in April, reflecting a decline of 25% compared to $235 million in March 2025, the State Bank of Pakistan (SBP) said Thursday. Out of the total April inflows, $24 million has so far been repatriated, while funds to the tune of $159 million have been utilised locally. The central bank shared that the total number of RDA accounts opened reached 814,244 from 805,442 a month ago at March-end, showing a month-on-month increase of 8,802 accounts. As per the latest data available on the SBP's website, the cumulative RDA inflow clocked in at $10.18 billion by the end of the previous month, out of which $1.757 billion has so far been repatriated, while funds to the tune of $6.527 billion have been utilised locally. Consequently, total net repatriable liability stands at $1.897 billion as of April-end. Out of the total outstanding liability, an amount of $1,356 million is with Naya Pakistan Certificates, with $456 million in conventional NPCs and $900 million in Islamic instruments. Similarly, an amount of $444 million is 'balances in accounts', the SBP data showed. Meanwhile, Roshan Equity Investments declined monthly and stood at $58 million, registering a monthly decline of 6%. Background RDA is a significant source of foreign exchange inflows for Pakistan, which is grappling with liquidity challenges. The initiative was launched in September 2020 by the SBP and offers up to 8% profit on US dollar investments.
Business Recorder
12-05-2025
- Business
- Business Recorder
Remittance 10MFY25 snapshot
Remittances to Pakistan reached an all-time high of $31.2 billion during the first ten months of FY25 (10MFY25), registering a remarkable 31 percent year-on-year increase from $23.9 billion in the same period last year. The surge marks a critical lifeline for the country's fragile external account and underscores the economic resilience of the overseas Pakistani community. However, despite the cumulative strength, there was a sharp decline in inflows during April 2025—down 22 percent month-on-month. March's spike was widely attributed to seasonal factors linked to Ramadan and Eid-related transfers. The April drop, while expected in part, was deeper than forecast and is raising fresh concerns over the sustainability of remittance momentum in the months ahead. Year-on-year, April 2025 still reflected a healthy 13.1 percent growth, showing that the overall trend remains positive. Yet the volatility suggests the need for policy vigilance. Saudi Arabia and the United Arab Emirates remained the two largest corridors. Saudi Arabia contributed $7.6 billion in 10MFY25, followed by the UAE at $6.36 billion. Inflows from the United Kingdom stood at $4.78 billion, and the United States contributed $3.12 billion. These four corridors together accounted for over two-thirds of Pakistan's total remittances. The growth in formal channel flows is supported by improved compliance measures, narrowing of the gap between official and open market exchange rates, and expanded access to digital remittance channels. Programs such as the Roshan Digital Account and Raast have also played a role, although their adoption may now be plateauing. Recent economic recovery has also fuelled growth in remittances. According to an ADB Working Paper, macroeconomic variables in both sending and receiving countries significantly shape remittance flows to Pakistan. The study found that economic activity abroad—especially in the Gulf and Western economies—remains a strong driver of remittance inflows. Migrants tend to remit more when their income prospects are strong. Then, domestic inflation in Pakistan consistently boosts remittance flows, reflecting a compensatory motive where migrants support their families against rising domestic interest rates have a delayed positive impact on remittances, suggesting that higher returns at home eventually attract greater financial inflows. Finally, the oil prices are positively associated with remittance growth, particularly from Saudi Arabia. When oil revenues rise, Gulf economies experience employment, and wage gains that cascade into higher the report also highlights that the structural and persistent drivers—such as diaspora size, cost of transfer, and cultural remittance habits—remain dominant. This implies that remittances tend to persist even in the face of macroeconomic fluctuations, though their growth rate may vary. Looking ahead, Pakistan's full-year FY25 remittances are likely to exceed $36 billion, barring major external shocks. However, in the coming months, a softening of economic activity in the Gulf, rising inflation in host countries, and reduced incentives through formal channels could all weigh on inflows in the final two months of FY25. Additionally, the stabilizing exchange rate may reduce the urgency to remit early or through official banking routes.
