JS Securities Limited – JS Research (September 12, 2022)

Karachi, September 12, 2022 (PPI-OT): Assessing the goal of exports + remittances exceeding imports

In a bid to improve the country’s narrow import cover of ~6 weeks, we understand one of the evident aspirations of incumbent Finance Minister is to generate more receipts (via goods exports and remittances) than payments for imports.

Pakistan has witnessed a surplus on this balance 9 times since 1973, 5 times in the last 11 years owing to (1) declining global oil prices limiting rise in import bill and/or (2) strengthening remittances.

We run a sensitivity on import bill from drop in oil prices and increase in remittances per non-resident Pakistani. Assuming all else equal, an oil price average of US$50-60/bbl or a 10% jump in remittance / NRP will be required to make this goal possible in FY23 but higher imports post-floods is a key risk to our analysis based on pre floods estimates.