Pakistan, being a country known for its high levels of political uncertainty and social struggles

has had a history of facing volatility in its Balance of Payments (BOPs) and other economic
metrics. In the FY22, Pakistan experienced a surge in inflation with its current account deficit at
a staggering 17 billion dollars. An already weak economy with debts standing at $220 billion,
along with political unrest and severe floods had the nation gripped. However, when the new
government came into power, they striked a loan deal with the IMF (International Monetary
Fund) agreeing to remove the price caps and let the economy on a freefloat. This resulted in the
economy to gain some stability and the current account deficit fell to $2 billion in the FY23 and
further to $831 million so far in FY24. This was majorly due to the drop in imports of goods and
services which was as a result of strict policies and duties on imports, along with the weak
rupee value. The exports in goods and services also declined from $39.5 billion in FY22 to
$35.4 in FY23 and then $19 billion in FY24 so far. We can also notice that the decline in imports
is much greater than the decline in exports over the past 3 years. This can also be considered
an opportunity to focus on the exports of services and try to limit the imports of services.
Another major factor contributing in the current account of Pakistan’s BOP is the
secondary income. The balance of secondary incomes also saw a decline in the past 3 years. It
went from $32.5 billion in FY22 to $28.3 billion in FY23 and then finally $14 billion in FY24 so
far. Among all the heads in the current account, the secondary income is the only head that is
not in a deficit which is a massive opportunity for Pakistan to exploit and to work on. The capital
account does not contribute significantly to Pakistans BOP.with a balance of a measly $22
million in the first half of the fiscal year 2024. The capital account debit stands at 0 which means
there has been no money that has left pakistan in the form of migrants, patents etc. Surveys
have shown however that there have been many people who have migrated out of Pakistan
which raises questions regarding the reliability of data in the official BOP of Pakistan or the
system ensuring the restrictions on taking money from the country. This is a factor that the
Pakistani government must take into consideration and work on. The financial accounts’
balance represents the movement of money in and out of the state as a result of direct
investments, financial assets etc. The BOP shows that there are mainly 3 types of investments
that contribute in the Financial account namely: Direct investments, portfolio investments and
other investments. The deficit in these fell from nearly 11 billion to a merely 4 billion dollars in
the FY24 so far. However with multinational corporations moving their operations away from
Pakistan, coupled with the increase in political unstabilty and unfavourable policies, the financial
account poses a real threat to Pakistan’s BOP in the future years.