Staff Report
ISLAMABAD: In the context of the ongoing political instability, reports of a shortage of dollars in the country and other relevant factors, different sources of inflows such as Foreign Direct Investment (FDI), Exports, and Remittances have experienced a declining trend during the last five months, raising eyebrows in the financial corridors which should ring alarm bells in the quarters concerned.
According to the monthly Economic Update and Outlook report released by the Finance Ministry on Friday, the FDI reached $430 million during July-November 2022 against $ 884.9 million dollars in the corresponding period last year, which is a 51.4 percent decline.
The situation emerged when the government was looking for the inflows of dollars utilizing all possible sources to meet its external liabilities.
Decline in Exports
Meanwhile, the exports during July-November 2022, stood at $ 11. 9 billion dollars against $12. 4 billion dollars during the same period last year, witnessing a decline of 3.4 percent.
Remittances
As the remittances are concerned, they witnessed a decline of 9.6 percent and were recorded at $ 12.0 billion against $ 13.3 billion dollars during the same period last year.
According to the finance ministry’s monthly report, the country’s total foreign exchange reserves were recorded at the level of $ 12 billion with the SBP’s reserves standing at $ 6. 1 billion.
It has been expected that the CPI inflation will remain in the range of twenty-one to twenty-three percent.
Meanwhile, the overall fiscal deficit was recorded at 1.5 percent of GDP during July-October 2022 as compared to 0.9 percent of GP in the previous year.
As further maintained in the report, the economic growth can remain below the budgeted target due to the aftermath of the devastating floods. This combination of low growth, high inflation, and low levels of official reserves are particularly alarming for policymakers, the report acknowledges, affirming that fiscal consolidation is the uppermost priority of the government.
