Reduction in FX swaps stabilize the external account: Sheikh

• The country's current account deficit fell sharply by 73 percent during the first five months of this fiscal year (FY20), supported by lower import bill.
• According to the SBP, the country's current account deficit stood at $ 1.821 billion in Jul-Nov of FY20

Advisor to Prime Minister on Finance and Revenue, Abdul Hafeez Shiekh said on Friday, that the $3 billion reduction in Foreign Exchange swaps and forward liabilities brought stability to the external account. As the reduction increased Foreign Exchange buffer by $4.8bn

In a tweet, Sheikh said: “Current Account Deficit is down by 72.6pc in Nov 2019 & 73pc between July-Nov 2019 versus same period in 2018.

“In 5 months, increase in SBP Reserves by $1.8bn and reduction of $3bn in Foreign Exchange swaps/forward liabilities increased Foreign exchange buffer by $4.8bn providing further stability to external account,” he added.

Current Account Deficit is down by 72.6% in Nov 2019 & 73% between July-Nov 2019 vs same period in 2018.

In 5 months, increase in SBP Reserves by $1.8B & reduction of $3B in FX swaps/forward liabilities increased FX buffer by $4.8B providing further stability to external account. pic.twitter.com/TLODiizRsi

— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) 20 December 2019

The country's current account deficit fell sharply by 73 percent during the first five months of this fiscal year (FY20), supported by lower import bill.

According to the State Bank of Pakistan (SBP), the country's current account deficit stood at $ 1.821 billion in Jul-Nov of FY20 compared to $ 6.733 billion during the same period last year (FY19), depicting a notable decline of $ 4.912 billion.

Economists said that improvement in goods trade deficit coupled with growth in exports has resulted in massive reduction in the current account deficit during this fiscal year. However, they said that there is need to bring more foreign inflows to finance the current account deficit and build the country's foreign exchange reserves. For the last one year, the federal government is making efforts to bring down the current account deficit and after a long gap successfully turned the deficit into surplus in October 2019.