- Country’s economy recorded a $1.612 billion current account surplus, marking a significant milestone in financial stability
- Reko Diq mining could generate $74 billion in free cash flow, boosting economic growth, jobs, and infrastructure development
Pakistan’s economy has shown some resilience and potential for growth, despite facing challenges. Some of the areas that could help overcome these challenges are as under:
Reko Diq
Reko Diq mining has the potential to be a game-changer for Pakistan’s economy. With an estimated $74 billion in free cash flow expected over the next 37 years, this project could bring significant economic benefits to the country. The project, owned 50% by Barrick Gold and 25% each by the governments of Pakistan and Balochistan, is expected to start production by 2028. This could lead to substantial job creation, infrastructure development, and increased foreign investment in Pakistan.
Some of the key benefits of the Reko Diq mining project include:
– Economic Growth: The project is expected to generate significant revenue for Pakistan, which could help stabilize the country’s economy.
– Job Creation: The project will create thousands of jobs during peak construction and provide long-term employment opportunities for locals.
– Infrastructure Development: The project will require significant infrastructure investments, including roads, bridges, and utilities, which could benefit the local community.
– Foreign Investment: The project has already attracted interest from foreign investors, including Saudi Arabia’s Manara Minerals, which could lead to further investments in Pakistan’s mining sector.
However, it’s essential to ensure that the project is developed responsibly, with adequate environmental and social safeguards in place. The project’s environmental impact assessment has been completed, and Barrick Gold has committed to implementing international best practices for responsible mining.
Workers’ remittances
Pakistan received a whopping $30.25 billion in workers’ remittances in FY24 marking a significant milestone for the country. This robust inflow of remittances is a testament to the resilience of Pakistan’s economy and the vital role played by overseas Pakistanis in supporting their homeland. It also reflects the trust and confidence of expatriate community in Pakistan’s economic stability. The influx of foreign exchange has helped stabilize the country’ economy, providing the much needed boost to its foreign exchange reserves.
The significant contribution of overseas Pakistanis to the country’s economy through remittances is a positive indicator of nation’s economic prospects. As Pakistan continues to navigate economic challenges, the support of diaspora community will remain crucial in shaping the country’s economic future. Workers’ remittances is expected to touch the level of $36 billion in FY25.
Current account surplus
Pakistan has recorded a significant milestone in its economy with a current account surplus of $1.612 billion in the fourth quarter of 2024. This is a remarkable achievement considering the country’s history of current account deficits. In fact, the average current account balance in Pakistan from 1976 to 2024 was a deficit of $793.9 million.
The surplus is a welcome change and it is interesting to note that the previous highest surplus was significantly lower than the current one. On the other hand, the country’s worst current account deficit was $6.308 billion in the second quarter of 2018.
Overall, this development suggests that Pakistan’s economy is headed in the right direction with efforts to boost exports, curb imports and attract foreign investment is potentially paying off.
Some of the other positives are:
Progress in poverty reduction: Between 2001 and 2018, Pakistan made significant progress in reducing poverty, with the poverty rate declining substantially.
Remittances: Pakistan has consistently received significant remittances from overseas Pakistanis, which has helped stabilise the economy.
Economic stabilisation: Recent efforts have led to some economic stabilization, with the economy beginning to recover in FY24.
GDP growth: GDP growth is projected to gradually recover, reaching 2.8% in FY25, driven by improved business confidence and credit rating upgrades.
Investments in human capital: The World Bank is supporting various projects in Pakistan, including investments in education, healthcare, and social protection, which can help drive long-term growth.
Reforms and development projects: Pakistan has been working on various reforms and development projects, such as the National Health Support Program, Sindh Integrated Health and Population Project, and Punjab Family Planning Program, which aim to improve healthcare, education, and family planning services.
These positives indicate that Pakistan’s economy has the potential for growth and development, despite the challenges it faces.