Pakistan’s current account posts surplus of $75mn in August 2024

Pakistan’s current account posted a surplus of $75 million in August 2024 compared to a deficit of $152 million in the same month of the previous fiscal year, data released by the State Bank of Pakistan (SBP) on Wednesday showed.

“The improvement in the current account is due to remittances which clocked in at $2.9 billion, up 40% YoY. In 2MFY25, remittances are up 44% YoY,” said brokerage house Topline Securities in a note.

The current account deficit was originally reported to be at $162 million in July 2024, but the SBP revised it in today’s data to be at $246 million.

This takes Pakistan’s current account deficit in the first two months of the current fiscal year (2MFY25) to $171 million, an amount that is a massive 81% lower than the deficit of $893 million in the same period of the previous fiscal year.

In August 2024, the country’s total export of goods and services amounted to $3.108 billion, up nearly 1% as compared to $3.081 billion in the same month of the previous year

Meanwhile, imports clocked in at $5.62 billion during August 2024, a jump of nearly 10% on a yearly basis, according to SBP data.

Worker remittances clocked in at $2.943 billion, an increase of 40% 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.

2MFY25

In 2MFY25, the country’s total export of goods and services amounted to $6.12 billion. Whereas, imports clocked in at $11.26 billion during the period, according to SBP data.

The country’s worker remittances clocked in at $5.94 billion, an increase of nearly 44% as compared to same period last year.

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.

To boost its reserves, Pakistan has been pursuing another bailout programme with the International Monetary Fund (IMF).

Back in July, Pakistan managed to reach a staff-level agreement on a 37-month, $7-billion Extended Fund Facility (EFF), merely months after concluding a $3-billion Stand-By Arrangement.

The IMF Executive Board is scheduled to take Pakistan’s programme on the agenda on September 25.