Pakistan’s current account deficit clocked in at $0.4 billion in December 2022, down massively from $1.9 billion in the same month of the previous year, data released by the State Bank of Pakistan (SBP) showed on Wednesday. However, on a month-on-month basis, the current account deficit rose from $252 million in November 2022.

Cumulatively, the deficit stood at $3.67 billion in July-December (6MFY23), compared with $9.09 billion in the same period of FY22.

The current account deficit is a key figure for Pakistan as a widening gap puts pressure on the currency that saw its 21st successive decline on Wednesday (today).

Policymakers have been making desperate attempts at curtailing the bulging import bill, using administrative tools at their disposal to control the outflow of dollars. These measures have included delays in opening letters of credit and imposing cash limits on travelers proceeding out of Pakistan.

However, on Wednesday, the SBP came under heavy criticism as Karachi’s business community demanded resolution of the LC issue that has seen industrial activity reduce by almost one-fourth in the past few months.

The developments come on the back of a massive fall in official foreign currency reserves that clocked in at $4.3 billion earlier this month, leaving the level at less than one month of import cover. Global benchmarks suggest an adequate level of official reserves needs to be at three months of import cover.

Pakistan projected its financing requirements for FY23 based on a current account gap of $10 billion. However, in six months of FY23, the deficit has remained under $4 billion.