A bleak outlook

During the first half of this fiscal year (July-Dec 2023), the current account deficit fell to just $831 million from a whopping $3.63 billion in the same period of last year. Also, net foreign direct investment (FDI) in July-Dec 2023 rose 35 per cent to $862.6m from $640m in July-Dec 2023, according to the State Bank of Pakistan (SBP). One can expect a substantial increase in FDI as foreign investment in the energy sector starts flowing in from Saudi Arabia, UAE and Qatar anytime this year. The Special Investment Facilitation Council, co-run by the civil and military leadership, is busy finalising a few big-ticket FDI deals in oil and gas exploration and processing as well as in the mining and agriculture sectors. But despite unprecedented import contraction, both organic and policy-made, experienced in July-Dec 2023, the current account deficit for this fiscal year may touch the $5.7bn mark, according to the revised estimates of the International Monetary Fund (IMF).