The Ministry of Finance on Friday claimed that the government's macro adjustment policies such as monetary tightening, exchange rate adjustments and cuts in development spending have started to pay off, with stability and growing strength visible in many sectors of the economy.

In a press release, the ministry pointed out that the current account deficit contracted significantly by 32.1 per cent to $13.508 billion (4.8pc of the GDP) during FY2019 as compared to $19.897bn (6.3pc of the GDP) last year.

In continuation of the trend, the current account deficit in July-August FY2020 declined by 54.7pc to $1.292 billion as compared $2.85bn during same period last year.

The ministry outlined the impact of the government's economic policies on three key sectors of the economy: exports, imports and remittances.

Exports rise marginally

According to the statement, Pakistan’s exports during FY2019 stood at $22.979bn compared with $23.212bn during FY2018. The ministry attributed this decline of 1pc to a strong negative price effect dominating the positive quantity effect.

During July-August FY2020, exports increased by 2.79pc to $3.753bn against $3.651bn during the same period last year.

Textile exports, which constitute more than 60pc share of the total exports, increased by 2.3pc in value over the last year.

During the period under review, value-added exports increased due to growing demand and improvement in export competitiveness following exchange rate adjustment, the ministry said.

Bedwear with a share of 10.7pc in exports increased both in quantity and in value by 20.4pc and 1.2pc, respectively.

Food group, which has a 17.3pc share in exports, increased in value by 17.3pc of which rice increasing in both quantity and value by 47.6pc and 48.6pc, respectively.

Imports drop significantly

The government's stabilisation efforts resulted in a decline of 9.86pc in imports in FY2019. Imports, which stood at $60.795bn in FY2018 fell to $54.799bn during FY2019.

The same trend was witnessed during July-August FY2020, with imports decreasing by a steep 21.41pc to $7.677bn against $9.769bn in the same period last year.

In order to curtail rising imports, the government imposed up to 60pc regulatory duties on 570 luxury and non-essential imported goods.

According to an analysis of merchandise import data cited by the ministry, the import of machinery, which has a share of 22.4pc in total imports, increased by 8.2pc.

"This signifies an impressive picture ahead in terms of dwindling situation of LSM (large-scale manufacturing)," the ministry said.

Textile machinery, telecom machinery and electrical machinery imports increased by 17.3pc, 11.1pc and 20.3pc, respectively. Imports of other types of machinery increased by 20.1pc.

Food group, which constitutes 9.1pc of the total imports, registered a decline of 26.8pc during July-August FY2020.

According to the finance ministry, minor and major crops of domestic agriculture have improved during the current fiscal year which has lessened the dependency on imported food.

Remittances decline

On the back of initiatives taken by the government, workers’ remittances increased by 9.7pc to $21.846bn during FY2019.

Remittances declined during the first two months of FY2020. "However, ongoing scenario of overseas employment will be helpful in achieving remittances target this year," the finance ministry said.

According to overseas employment statistics, 373,000 people went abroad during the first eight months of 2019. In comparison, a total of 380,000 people were registered as overseas employees in the whole year of 2018. The increase will positively impact foreign exchange inflows, the ministry said.

The statement said that the Pakistan Remittance Initiative has intensified its efforts by launching campaigns in local and foreign media to encourage overseas Pakistanis to remit funds through legal means.