so we borrowed money then? we will have to pay it nonetheless.First of all the fact that you think a current account deficit can be covered with 'tax money or import duties' tells me all I need to know about your economic knowledge.
Think I have to start from scratch. Current account essentially relates to the amount of dollars coming into the country vs the amount going out. Now Pakistan cannot print dollars, but it does need dollars to trade with the rest of the world. What should it do? It tries and earn them through exports and also depend on the benevolence of overseas Pakistanis who send their hard earned money to Pakistan in the form of much needed dollars. Now Pakistan uses these dollars to pay for imports. In a very basic sense the equation becomes:
exports + remittances - imports = current account
There are other factors too but lets keep it simple. Now during the previous government our current account was in a deficit of 20 billion dollars. The trade deficit (imports - exports) was touching $40b and remittances were only at around $20b. How do you envision the government would pay this gap of $20b? The Nooras took loans and plenty of them.
When PTI took over these loans had not only become matured there weren't alot of dollars left in the country to continue on the same path. This is what why you saw IK going to friendly countries asking for bail out AND severe devaluation in the currency took place. He wasn't begging for himself. He was begging for YOU and the rest of the nashukri quam, so that your head remains above the water and that you don't have to pay Rs500 for a single naan. That is also why IK's government had to go to IMF.
Now what did the PTI government do to curb the $20b current account deficit? For starters remittances were incentivized to be channeled through official means. Hawala hundi business was cracked down on and offices of forex dealers participating in shady businesses were raided. This all led to remittances increasing to $21b in FY19 from $20b in FY18, and then to $23b in FY20. So far in FY21, remittances are 20-30% higher than FY20. I hope we breach the level of $25b by the end of the year.
The next factor in the equation is imports. PML-N government took imports of goods and services to $67b, we were importing everything from expensive cheese to mineral water to fancy cosmetics. If you earn a middle class income and you go out and buy a Ferrari you wouldn't survive very long. Same principles apply to countries. The PTI government severely curbed unnecessary imports and increased taxes and tariffs on luxury items. Devaluing the currency and high interest rate also discouraged imports. This is all lead to imports dropping from $67b in FY18 to $42b in FY20.
Exports growth has lagged behind since you cannot just build industry in a day or even a year, with the strict monetary policy the exporters didn't even have funds available to invest and enhance capacity or to set up new ventures. That being said, even with the covid shock our exports have held their ground and not plummeted like India and Bangladesh. Early signs for this fiscal year are good and we may match the performance of previous couple of years. Obviously need of the hour is to increase exports substantially, but PTI are having to start from scratch because during the PML-N government exports of goods fell from $25b in 2013 to $23b in 2018 showing signs of deindustrialization in the country.
Also since you mentioned "tax money" jeeringly, I'll let you know that last fiscal year was the first time FBR collected over Rs 4000b in taxes. The target was Rs 5000b and we were on track for that as well but with corona hitting and zero economic activity in the last quarter we fell short of the target. In FY21, the target is again Rs 5000b and the revenue collection numbers for the first quarter show that we are exceeding the target so far.
Hope my post helped fill the massive gaps in your knowledge.
lets rejoice on that performance. add some insults to opposition job done.
you could've saved your self having to write a war story. there was nothing substantial to suggest in exports or foreign remittances.