KARACHI: The country’s current account deficit shrank 57 percent during the first five months of this fiscal year (FY23), mainly due to lower goods import bill. The State Bank of Pakistan (SBP) Friday reported that the current account recorded a deficit of $3.1 billion during July-Nov of FY23 against $7.23 billion in the same period of last fiscal year (FY22), showing a decline of $4.135 billion.
Analysts attributed the massive fall in the current account deficit to the notable decline in the import bills supported by the government measurers. The country’s foreign exchange reserves are continuously sliding for the last one year due to massive external debt payments and lower foreign inflows. Therefore, the federal government has taken a number of steps to curtail the import bill and save the precious foreign exchange reserves. Current account deficit in November 2022 also witnessed a downward trend and fell to 19-month low.
The country posted a current account deficit of $276 million for November 2022 compared to a deficit of $1.9 billion in November 2021, depicting a decline of 86 percent.
Current account deficit in November 2022 is also 51 percent lower than October 2022, in which the country posted a $569 million current account deficit.
Pakistan's current account deficit clocks in at $567mn in October
With the government’s preventative steps, imports fell by 16 percent or $4.8 billion, while exports broadly unchanged at $12 billion in the first five months of this fiscal year. Import bill down from $29.664 billion to $27.872 billion in July-Nov of FY23.
Commutative deficit of Goods, Services and Income sector also fell to $21.062 billion in July-Nov of FY23 versus $15.556 billion, down 26 percent.
However, inflows of workers’ remittances continued a declining trend and fell10 percent during the first five months of this fiscal year. Workers’ remittances recorded an inflow of $12 billion during July-Nov of FY23 compared to $13.3 billion in the same period of last fiscal year. The country’s total liquid foreign exchange reserves stood at $12.57 billion at the end of last week. Out of this the SBP’s reserves are $6.7 billion and forex reserves held by commercial banks are $ 5.87 billion.
Copyright Business Recorder, 2022