Pakistan’s current account posts surplus of $619mn in March

Pakistan’s current account posted a surplus of $619 million in March 2024, a massive jump compared to the revised surplus of $98 million in the previous month, revealed data released by the State Bank of Pakistan (SBP) on Monday.

“This is the highest monthly surplus after 9 years,” said brokerage house Topline Securities in a note.

Overall, during the nine months of the ongoing fiscal year, the current account balance stood at a deficit of $508 million, massively lower by 87% than $4.05 billion in the same period of the previous year.

The surplus has been “supported by jump in remittances amid Ramadan/Eid season and lower trade deficit,” said Arif Habib Limited (AHL) in a note.

“This also marks third highest monthly surplus in the history of the country,” it added.

On the other hand, experts noted that a high interest rate and some restrictions on imports have also aided the policymakers’ objective of a narrower current account deficit.

During March 2024, Pakistan’s exports of goods and services stood at $3.23 billion, while imports clocked in at $5.249 billion.

Meanwhile, remittances in March 2024 clocked in at $2.954 billion, an increase of 31% month-on-month.

In 9MFY24, the country’s total export of goods and services amounted to over $28.8 billion, but imports also rose over $46.2 billion during the period, according to SBP data.

In its monetary policy statement last month, the SBP had assessed that the current account deficit is likely to remain closer to the lower bound of 0.5 to 1.5% of GDP forecast range for FY24, which will support the foreign exchange reserves position.

The current account is a key figure for cash-strapped Pakistan which relies heavily on imports to run its economy. A widening deficit puts pressure on the exchange rate and drains official foreign exchange reserves.

Authorities in Pakistan are currently seeking a longer and bigger loan to help bring permanence to macroeconomic stability.

Pakistan’s current $3 billion Stand-By Arrangement (SBA) inked with the IMF last year runs out in late April.

Pakistan is hoping that the executive board’s approval will pave way for the country to receive funds of around $1.1 billion as its final tranche.