- Primary reason for the deficit was a 68 percent jump in imports
Karachi: The country's current account posted a $2.2 billion deficit during the first two months of this fiscal year on the back of higher import bill.
Pakistan's imports continue to increase due to rising commodity prices in the world market. According to the State Bank of Pakistan (SBP), the recent rise in current account deficit reflects both the strong domestic recovery and higher international commodity prices.
However, despite the higher current account deficit, SBP's foreign reserves rose to an all-time high of $20 billion supported by the arrival of inflows from international financial institutions.
SBP on Friday reported that the cumulative current account recorded a $2.29 billion deficit during July-August of FY22 against a surplus of $838 million in the same period of last fiscal year (FY21).
Current account for the month of Aug 2021 posted a deficit of $1.476 billion compared with a surplus of $255 million during Aug 2020. Current account deficit in August 2021 was up 81 percent from last month's (July 2021) deficit of $814 million.
Analysts said the primary reason for the deficit was a 68 percent jump in imports. Exports, however, also showed improvement and clocked-in 35 percent higher during the first two months of this fiscal year.
Total imports were $11.406 billion while exports stood at $4.6 billion. Moreover, the balance of trade recorded a deficit of $6.8 billion during July-Aug of FY21 compared with a deficit of $3.4 billion in the same period of last fiscal year.
The detailed analysis showed that the cumulative deficit of goods, service and income surged to $8.06 billion in the first two month of FY22 compared to $ 7.8 billion in the same period of FY21.
During the period under review, services trade deficit stood at $619 million, with $1.008 billion exports and $ 1.627 billion imports in July-Aug month of this fiscal year. Similarly, with $ 747 million payments and $ 112 million receipts, the primary income sector deficit declined to $ 635 million in July-Aug 2021.
Copyright Business Recorder, 2021