KARACHI: After posting deficits for four consecutive months, the country’s current account improved significantly and recorded a $9 million surplus in November 2023.
The State Bank of Pakistan (SBP) on Wednesday reported that Pakistan posted a current account surplus of $9 million in November 2023 as against a deficit of $ 157 million in November 2022. The current account has recorded the first monthly surplus after June 2023, in which the surplus was $334 million.
During the initial four months, despite a massive decline in the import bill, the country’s current account recorded deficit and during October 2023, the deficit was $ 184 million.
Jul-Oct C/A deficit dips sharply
Cumulatively, the current account deficit also fell sharply 64 percent during the first five months of this fiscal year. Current account posted a $ 1.16 billion deficit in July-Nov of FY24 compared to a deficit of $3.264 billion in the same period of last fiscal year (FY23), depicting a decline of $ 2.104 billion.
The sharp decline in current account deficit is attributed to lower import bill and growth in exports. The country’s exports posted 5 percent growth to reach $12.511 billion in July-Nov of FY24 up from $ 11.915 billion in corresponding period of last fiscal year. While Pakistan’s imports declined by 16 percent or $ 4 billion to $ 21.281 billion in the first five months of this fiscal year as against $25.342 billion in the same period of last fiscal year.
SBP in its recent Monetary Policy Statement has observed a significant improvement in the current account balance, as the deficit is continually narrowing during the initial months of this fiscal year. Imports are witnessing downward trend, while exports are inching up on the back of food items, especially rice.
According to SBP, tepid official inflows since July and ongoing debt repayments have led to a gradual decline in the foreign exchange reserves. However, the successful completion of the first review of the ongoing IMF program and release of a second tranche of $700 million is likely to further improve financial inflows as well as the foreign exchange reserves position of the country.
The IMF executive board met on Jan 11, for the approval of release of the second tranche under the Extended Fund Facility (EFF) program.
Copyright Business Recorder, 2023