The current account deficit (CAD) in Pakistan saw a drastic 81% decline in the first two months of FY25, with August even showing a surplus after four months of deficit. This surplus of $75 million in August comes as a relief for the government struggling to meet the rising external debt servicing costs, which are estimated at $26.2 billion for FY25.
Financial experts are cautious about the economy’s outlook despite an expected $7 billion IMF loan approval for debt repayment. The government also requires a $12 billion rollover from China, Saudi Arabia, and the UAE.
The CAD for July-August FY25 was $171 million, a significant improvement from $893 million in the same period last year. Foreign direct investment surged by 55.5% in August, although concerns linger regarding the overall investment levels.
The August surplus signals positive investor sentiment, with hopes for increased inflows. The government’s efforts to attract foreign investors face challenges due to political uncertainty and short-term economic policies.
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