- High imports and decline in remittances behind increase
- Cumulative deficit for July-Nov clocks in at $7.09 billion
Pakistan's current account deficit widened further to $1.91 billion in November 2021, up from $1.76 billion in October, and a complete turnaround from November 2020 when it posted a surplus of $563 million, revealed data released by the State Bank of Pakistan (SBP) on Monday.
A high import bill, which stood at over $6.4 billion, and decline in remittances month-on-month contributed to the deficit.
The figure for November brings the total current account deficit to $7.09 billion in the five months of the ongoing fiscal year (July-November), a drastic change of events when compared with the same period of the previous year when Pakistan posted a surplus of $1.88 billion.
The widening current account deficit has put severe pressure on the country's currency that has shed nearly 15% of its value since May this year, contributing to inflation, and forcing the central bank to aggressively tighten its stance towards interest rates. Inflation reading came in at 11.5% for November, a nearly two-year high.
The SBP has raised the key policy rate by 275 basis points since September in what is being called the 'boldest' stance in Asia. Its latest hike was of 100 basis points, which took the rate to 9.75%.
On Monday, the rupee remained stable to close at 178.04 against the US dollar in the inter-bank market, which still remains its weakest level in history.