EDITORIAL: Prime Minister Shehbaz Sharif, while chairing a Cabinet meeting, reassured the country that stock of petroleum and products were adequate to meet domestic demand with concerns over shortages receding after a Pakistan-bound oil tanker was allowed to pass through the Strait of Hormuz as well as the Iranian Foreign Minister Abbas Araghchi expressing gratitude for Pakistan’s support in its escalating conflict with US and Israel. He then proceeded to take stock of the economy and credited timely government decisions as a key factor in achieving stability. His claim is backed by improvements in two key macroeconomic data. First, a surplus current account – USD 427 million in February 2026 against USD 68 million in January 2026 due to a sustained monthly rise in remittance inflows – USD 3,288 million in February 2026 as opposed to USD 3,127 million in the same month last year. The cumulative total for the first seven months (July-January); however, was a deficit of USD 1.1 billion as per the February economic update and outlook released by the Finance Division, giving a total deficit for the first eight months of the current year of USD 673 million. And, secondly, strengthening of foreign exchange gross reserves to USD 17,164 million. A look at the components of the current account surplus indicates the prevalence of external factors as a consequence of the ongoing Middle East conflict. Thus even though exports contracted to USD 2,482 million in February 2026 (against USD 2,745 million in January 2026 and USD 2,609 million in February 2025) imports contracted to USD 5,152 million in February against USD 5,346 million in January 2026. In February 2025, imports were lower at USD 5,050 million yet the reason was the implementation of administrative measures to check imports though the government loosened these measures as they were impeding the growth rate with a consequent negative impact on employment opportunities and poverty levels. Gross foreign exchange defined as the total foreign assets held by the State Bank of Pakistan must not be confused with net foreign exchange reserves that are calculated by subtracting short-term foreign liabilities or unencumbered liquidity to support the currency. Be that as it may, foreign exchange reserves on 13 February 2026 were lower at USD 16.2 billion as per the economic update and outlook though some questions may be raised at the exchange rate remaining stable, given that the reserves were lower at 11.2 billion-rupee on 14 February 2025 – 279.6 rupees to the US dollar in February 2025 to 279.5 rupees on 26 February 2026. The government would be well advised to consider two other indicators that performed poorly – the decline in foreign direct investment July-January 2026 to USD 981.4 million against USD 1,660.7 million in the same period the year before, or a disturbingly high decline of 40.9 percent, and portfolio investment that registered negative USD 463.9 million in the first eight months of the current year against negative USD 177 million in the same period the year before, a decline of 162 percent – which is in spite of the fact that our policy rate is by far the highest in the region. It is, therefore, about time the cabinet began to take a holistic approach to macroeconomic fundamentals rather than merely citing a statistic that appears to be an improvement without looking into its components. Copyright Business Recorder, 2026