THIS refers to the editorial ‘Curbing optimism’ (Nov 21) which rightly highlights the potential of risks going forward. The current account surplus in the month of October, albeit through one off transaction or unsustainable inflows in the portfolio investment, must not make the economic planners complacent.

There is no indication or certainty that the positive trend would be maintained. The export sector remains sluggish while a significant rise in remittances is not forecast with the dampened global economic scenario.

As economic activity starts picking up, investment in the expansion of manufacturing capacity gets underway and execution of key development projects, involving forex funding commences, it would exert significant pressure on the import bill and on the current account, at least during the gestation period, say three to four years.

There is no option but to mitigate the pressure by augmenting exports. It may require additional fiscal and tax incentives and other concessions. The management of the import bill, however, is very critical. Stringent curbs must be placed on the import of luxury and unnecessary items to provide adequate space for import of machinery, capital goods and raw material.

The months ahead will require great astuteness in managing the economy as a bullish trend in the international oil market can disrupt the projections. Also, laxity in implementing austerity may create difficulties.

Shoaib
Karachi

Published in Dawn, December 6th, 2019