- Pakistan’s current account deficit falls 57% in FY23 to $3.1 billion.
- Due to a fall in imports while exports remained “broadly unchanged”.
- Trade deficit has also come down during the period.
Islamabad: Pakistan’s current account deficit (CAD) shrank 57% on a year-on-year basis during the first five months of the current fiscal year, the State Bank of Pakistan (SBP) reported on Friday.
According to the monthly statistics uploaded by the central bank on the balance of payments, during the period under review, the current account recorded a deficit of $3.1 billion in FY23 compared to a deficit of $7.23 billion in FY22, showing a decline of $4.135 billion.
The SBP attributed the sharp decline in the current account deficit to a visible decline in imports as the exports remained “broadly unchanged”.
In Nov22, the current account deficit shrank to $0.28bn from $0.57bn in Oct22. Cumulatively, during Jul-Nov22 it has contracted by more than half to $3.1bn against $7.2bn in Jul-Nov21, with imports falling by $4.8bn (-16%) & exports broadly unchanged. Link https://t.co/q3LNv3HgLs pic.twitter.com/wJymqbJqdn
— SBP (@StateBank_Pak) December 16, 2022
The report stated that in the first five months, Pakistan’s imports fell nearly $4.8 billion to reach $24.87 billion compared to $29.7 billion recorded last year.
However, exports remained “unchanged” at $12.06 billion compared to $12.3 billion recorded last year.
In November alone, the CAD witnessed a very steep decline as it fell by nearly 86% to $276 million from $1.93 billion in November of FY22.
Fall in trade deficit
It is important to note that the trade deficit in the first five months of the current fiscal year has been recorded at $14.4 billion, which is 30.14% low than the deficit that was recorded in the same period last year, which was $20.62 billion.
Fall in remittances inflows
However, a trend of sharp decline has also been observed in the inflows of remittances during the first five months of FY23 compared to the same period last year, as inflows amounted to $12 billion this year compared to $13.3 billion recorded last year.
It is also important to note that Pakistan’s CAD had crossed $17 billion during FY22, after a staggering 531% increase in the balance of payments compared to the current account deficit of $2.8 billion recorded during FY21. The fall in CAD will help ease the pressure on the depleting forex reserves of Pakistan which have fallen below $7 billion.