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Presentation 15

This document discusses Pakistan's balance of payments (BOP) data from September 2022. It notes that Pakistan's current account deficit was $2.3 billion in September 2022, lower than the previous quarter's deficit of $4.2 billion. It provides data on foreign direct investment, portfolio investment, and nominal GDP. Tables show BOP credit/debit/net amounts for FY19 and FY20 for current account, capital account, and financial accounts. Causes of Pakistan's BOP deficit discussed include a narrow export base, currency devaluation, rising consumption, higher input prices, increased capital goods imports, anti-dumping duties, and foreign debt servicing. Stimulating exports and import substitutes as

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18 views15 pages

Presentation 15

This document discusses Pakistan's balance of payments (BOP) data from September 2022. It notes that Pakistan's current account deficit was $2.3 billion in September 2022, lower than the previous quarter's deficit of $4.2 billion. It provides data on foreign direct investment, portfolio investment, and nominal GDP. Tables show BOP credit/debit/net amounts for FY19 and FY20 for current account, capital account, and financial accounts. Causes of Pakistan's BOP deficit discussed include a narrow export base, currency devaluation, rising consumption, higher input prices, increased capital goods imports, anti-dumping duties, and foreign debt servicing. Stimulating exports and import substitutes as

Uploaded by

Asad Bumbia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GROUP MEMBERS:

Jannat Usman
Eimaan Imran
Hoor Abdul Razzak
Syed Sharaheel Ahmed
Sania Irfan
There are 3 components of BOP

1 Current account

2 Financial account

3 Capital account

The current account must balance the


financial and capital account
DATA ON BOP

• Pakistan Current Account recorded a deficit of 2.3 USD bn in Sep 2022, compared with a deficit
of 4.2 USD bn in the previous quarter.
• Pakistan Current Account Balance: USD Mn data is updated quarterly with an averaged value of
-424.3 USD Mn.The data reached an all-time high of 1.4 USD bn in Sep 2002 and a record low
of -6.1 USD bn in Jun 2018.
• Foreign Direct Investment (FDI) increased by 94.9 USD Mn in Sep 2022.
• Pakistan Direct Investment Abroad expanded by 97.0 USD Mn in Sep 2022.
• Its Foreign Portfolio Investment fell by 30.0 USD Mn in Sep 2022.
• The country's Nominal GDP was reported at 377.3 USD bn in Jun 2022
Items FY19 FY 20
Credit Debit Net Credit Debit Net
1. Current 55,791 69,225 -13,434 54,254 58,703 -4,449
Account
A. Goods & 30,233 62,805 -32,582 27,973 52,398 -24,425
Services
B. Primary 578 6, 188 5,610 479 5,938 -5,459
income
C. Secondary 24,990 232 24,758 25,802 367 25,435
income
2. Capital 229 - 229 288 3 285
account
Net Lending 56,020 69,225 -13,205 54,542 58,706 -4,164
& Borrowing

3. Financial -2,165 11,098 13,263 4,250 8,264 4,014


Accounts

Amount in million dollars


Source: https://www.sbp.org.pk/
C AUSES OF BOP DEFICIT

• Narrow export base


Pakistan’s export base has been stagnant at an average value of around $30 billion, which is roughly
about 9% of the total GDP.

• Devaluation
The devaluation of PKR against USD has been another cause of the increasing BOP deficit of Pakistan.
The cost of imports increases significantly with this devaluation.

• Consumption
With a rapid increase in population and consequently, consumption habits, Pakistan’s exportable surplus
is going in a decline. Despite being an agricultural country, food imports are constantly on the rise . They
have gone up by 15% in the first three months of the fiscal year 2022-23. Pakistan's food imports went
up to $2.79 billion in July-September 2022.
• Increase in input prices
The inflated prices of inputs such as oil, electricity, machinery etc. have an adverse effect on the
domestic manufacturing industry.This leads to a rise in the cost of production, making it difficult to
reach export targets.Due to the increased prices of petroleum in the international markets,
Pakistan’s petroleum import bill has also gone up to $3,302 million this year.

• Import of capital goods


According to the Ministry of Commerce, about 40% of the increase in the import bill in 2021 was
due to capital goods.While this indicates rapid growth in the industrial sector, it continues to have
an adverse impact on the BOP.

• Anti-dumping duties
Countries like Japan and Hong Kong have levied anti-dumping duties on Pakistan for goods like
cotton and yarn.

• Foreign debt servicing


The huge amount of loans that Pakistan obtains from external sources come with an interest that
adds up to the BOP deficit. In 2019, Pakistan’s debt service on external debt were about $11
billion.
• Stimulation of Exports and Import Substitutes:

• Supply-side policy
Finally

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