Pakistan’s current account posts deficit of $162mn in July 2024

Pakistan’s current account posted a deficit of $162 million in July 2024, an amount that is a massive 78% lower than the deficit of $741 million in the same month of the previous fiscal year, revealed data released by the State Bank of Pakistan (SBP) on Monday.

“Deficit was higher than expectations due to higher trade deficit of $2.4 billion reported by the SBP in July, 2024, compared to $1.97 billion reported by the Pakistan Bureau of Statistics (PBS),” said brokerage house Topline Securities in a note.

“Normally SBP deficit numbers are lower than PBS numbers,” it added.

Pakistan’s current account posts deficit of $681mn in FY24

In July 2024, the country’s total export of goods and services amounted to $3.013 billion, up by 11% as compared to $2.706 billion in the same month of the previous year

Meanwhile, imports clocked in at $5.6 billion during July 2024, a jump of over 12% on a yearly basis, according to SBP data.

Worker remittances clocked in at $2.995 billion, as increase of 48% as compared to the previous year.

Low economic growth along with high inflation have helped curtail Pakistan’s current account deficit with an increase in exports also helping the cause. A high interest rate and some restrictions on imports have also aided the policymakers’ objective of a narrower current account deficit.

Monthly deficit

On a monthly basis, Pakistan’s current account lowered by 48% in July 2024 compared to a revised deficit of $313 million in June 2024, the SBP data revealed.

Pakistan’s exports of goods and services lowered by 2%, as compared to $3.081 billion in June 2024, while imports lowered by 1.3%, as compared to $5.675 billion in June 2024.

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.

Last month, Pakistan managed to reach a staff-level agreement on a 37-month, $7-billion Extended Fund Facility (EFF), with the International Monetary Fund (IMF), merely months after concluding a $3-billion Stand-By Arrangement.