- Huge deficit driven by massive increase in goods import bill
KARACHI: The country’s current account posted over $17 billion deficit during the last fiscal year (FY22) due to massive increase in goods import bill. The State Bank of Pakistan (SBP) on Wednesday reported that the current account deficit rose by 531% during FY22.
Overall, the current account deficit was $17.4 billion in FY22 compared to $2.8 billion in FY21, depicting an increase of $14.6 billion.
The CAD in FY22 is four-year high as previously $18.1 billion deficit was recorded in FY18.
On a month-on-month basis, the current account recorded a deficit of $2.275 billion for the month of June 2022 compared to deficit of $1.637 billion during June 2021.
On a year-on-year basis, the primary reason behind the deficit was 17% year-on-year increase in total imports to $8.4 billion in June 2022.
According to SBP, a surge in oil imports saw current account deficit rise to $2.3 billion in June despite higher exports and remittances.
So far in July, oil imports were much lower and deficit was expected to resume its moderating trajectory, the SBP added.
SBP in a tweet further said that 3.3 million metric tons of oil was imported in June, 33% higher than in May. Together with higher global prices, this more than doubled the oil import bill from $1.4 billion to $2.9 billion. By contrast, non-oil imports ticked down.
An analyst at Arif Habib Limited said the primary reason behind the deficit was 17% increase in total imports to $8.4 billion in June 2022. However, total exports and remittances also increased by 23% and 2% on year-on-year during June 2022, respectively.
Copyright Business Recorder, 2022