In Greek mythology, Sisyphus faced an eternal chore: he had to push a large rock up a hill. However, whenever he neared the top, the sheer weight of the rock would overwhelm him, his arms would give way, and the boulder would roll back down the hill.

As a result, Sisyphus had to start the laborious task all over again. Despite the endless nature of his punishment, one wonders if Sisyphus experienced a brief moment of triumph as he neared the peak when he could almost see his suffering concluding - only for it to be swiftly undone by the descent of the cruel rock. Is our satisfaction with the current account surplus reminiscent of Sisyphus’s fleeting moment of victory?

Pakistan has recorded current account surpluses for four consecutive months. The surplus of $334 million reported by the central bank for June sharply contrasts with the $1.26 billion deficit observed at the onset of FY23.

At first glance, it might appear that the policymakers have ushered the nation towards a positive pivot, with the current account now contributing to Pakistan’s forex reserves rather than depleting them, as was the case a few months ago.

For the fiscal year 2023 that ended in June, the current account came in at a deficit of $2.56bn, significantly lower than the deficit of $17.48bn in the prior year, the State Bank of Pakistan data shows.

It’s disconcerting that despite severe restrictive measures to curtail imports, the trade balance persists in an unfavourable state

While this progress is certainly noteworthy, it rests on a shaky foundation, mirroring Sisyphus’s short-lived relief. Absent the self-imposed economic deceleration, severe import restrictions, and the cushion of remittances, this surplus would likely have remained elusive.

It’s disconcerting that despite severe restrictive measures to curtail imports, the trade balance persists in an unfavourable state. With a $60bnn import bill vastly exceeding export proceeds of $35bn, Pakistan faced a substantial trade deficit of nearly $25bn in FY23.

The imports and exports constituted about 18 per cent and 10pc of the GDP respectively, mirroring trends seen over the past five years. This underscores the enduring issue of disproportionately high imports and sluggish export growth.

Despite the shift of the current account into a surplus, the inherent problems with the balance of trade remain unchanged. Therefore, it’s important not to be misled by the apparent relief the current account surplus might suggest.

This situation underlines the necessity for Pakistan to prioritise import substitution and export expansion to rectify the trade deficit and establish a robust current account.

Speaking of the import bill, the main contributor is the imports of energy products. Pakistan spent an astounding $17 billion on the procurement of energy products such as crude oil, petrol, diesel, LNG, and LPG, as per the Pakistan Bureau of Statistics. This enormous expenditure singularly accounted for more than 30pc of the total imports for goods in FY23.

This crucial area should draw the government’s attention to creating policies conducive to import substitution. Such an approach encompasses enhancing and expanding the local energy sector, which includes a broad spectrum of industries, from oil refining to solar power. It necessitates bolstering the domestic energy supply chain and increasing the capacity for in-house energy production.

This could be accomplished, for instance, by implementing policies that strengthen the oil refining industry, facilitating their efforts to grow or upgrade their facilities that produce critical fuels like petrol and diesel. A simultaneous focus should be on addressing the challenges faced by the oil and gas exploration and production industry that has been struggling to grow output.

Additionally, eradicating obstacles that hinder the development of Thar coal reserves is crucial, especially since Thar coal has turned into one of the lowest-cost sources for power generation, as opposed to the imported LNG, which, as per the government’s estimate, is projected to become even more expensive than furnace oil.

The goal should be to curtail the import bill by augmenting existing domestic energy resources. As for the creation of new assets, alternative and clean energy should take centre stage in policymaking. The government seems earnest about cultivating alternative energy sources as it seeks to increase the share of power generation from clean energy to 60pc by 2030, which is a step in the right direction.

Meanwhile, policymakers must devise strategies to boost exports, which have been lingering at a mere 10pc of the GDP for years. The massive subsidies handed to export industries, particularly to basic textile manufacturers, have evidently failed to deliver the desired results. The government needs to diversify its reliance from a single, low-value producing industry to more high-value sectors, like IT, which have demonstrated tremendous potential. This transition must be supported by introducing coherent strategies to grow exports through diversification.

In terms of incentives, equal opportunities should be extended to all export-focused industries. Even when the government feels inclined to favour certain sectors, this must be backed by a thorough cost-benefit analysis rather than influence from powerful lobbyists.

An anti-export bias, as experienced by several sectors apart from textiles, needs to be addressed. The adoption of an export-led growth model has immensely benefited numerous Asian countries, and with suitable policies, Pakistan too can replicate this success.

By nurturing diversified export-oriented industries and promoting import substitution, Pakistan can rectify its trade imbalance and solidify its current account position.

Failing to do so, the recently reported current account surpluses may well mirror Sisyphus’s fleeting respite. A few quarters into the future, escalating imports alongside stagnant exports could once more strain the nation’s finances, sending us back down the economic hill in a Sisyphean struggle.

The writer is a corporate consultant, specialising in business and economic issues. Email: sarfarazis@yahoo.com, Twitter: @sa_cubes

Published in Dawn, The Business and Finance Weekly, July 31st, 2023