KARACHI: The country’s current account deficit narrowed by 68 percent during the first eight months of this fiscal year (FY23) supported by lower import bill. The State Bank of Pakistan (SBP) on Monday reported that Pakistan recorded a current account deficit of $3.861 billion in July-Feb of FY23 compared to $12.077 billion in same period of last fiscal year (FY22), depicting a decline of $8.216 billion.
The primary reason behind the decline in deficit was a 21 percent sharp decline in total goods imports due to government’s restrictions to save the foreign exchange reserves of the country. However, during the period under review total exports and remittances also decreased by 10 percent and 11 percent, respectively.
With $37.38 billion imports and $18.639 billion exports, the country’s total goods trade deficit down to $18.794 billion in the first eight months of this fiscal year as against $26.7 billion in corresponding period of last fiscal year. Month on Month basis, current account deficit clocked in at $74 million during Feb 2023 compared to $230 million in Jan 2023, showing a decline of 68 percent or $156 million.
The current account deficit in Feb 2023 is the lowest monthly deficit since Feb 2021.
Current account deficit for the month of Feb 2023 is also 86 percent lower than Feb 2022, in which the $519 million deficit was recorded.
Pakistan is facing a serious crisis of foreign exchange for the last one year and the government is trying to overcome this crisis to reduce the pressure on external account.
Currently, the country need healthy foreign inflows to build the sliding foreign exchange of the country, which stood at $9.847 billion including $4.319 billion held by the SBP and $5.528 billion of net foreign reserves held by commercial banks. The federal government has recently held talks with IMF for the release of $1 billion tranche of Extended Fund Facility (EFF) program. The government has fulfilled all conditions, however so far the staff level agreement has not signed between Pakistan and IMF.
The Finance Minster Muhammad Ishaq Dar is optimistic to receive the IMF tranche very soon. With arrival of IMF funds not only the country’s foreign exchange reserves will build up but other donors will release their pledged funds for the Pakistan.
Copyright Business Recorder, 2023
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