KARACHI: The country’s current account recorded 13-year lowest deficit in the last fiscal year 2023-24 (FY24) supported by healthy growth in exports and home remittances, the State Bank of Pakistan (SBP) reported on Friday.
Pakistan’s external account has performed well as current account deficit shrank by 79 percent during the last fiscal year. Pakistan’s current account deficit was amounted to $681 million in FY24 compared to a deficit of $3.275 billion during the previous year (FY23), depicting a decline of $2.59 billion.
Analysts said that in terms of GDP ratio it is 0.2 percent of GDP and this is the lowest current account deficit in the last 13 years. This significant decline was driven by a 6 percent reduction in the trade deficit and an 11 percent increase in remittances, they added.
Month on Month basis, the country recorded a current account deficit of $329 million in June-2024 up from $248 million in May 2024. This came higher than expectations due to higher balance on primary deficit of $1.1 billion.
The primary income deficit is coming over $1 billion for the second consecutive month as SBP is clearing a backlog of profit and dividends repatriations, which was restricted due to slow foreign inflows to keep the foreign exchange reserves at a reasonable level.
Analysts said that Pakistan recorded a lower current account on the back of robust growth in remittances and exports, which more than offset the uptick in imports.
Inflows of workers’ remittances registered 11 percent growth to an all-time high level of $30.3 billion in the last fiscal year up from $27.3 billion in the previous year.
The resultant lower current account deficit, along with improved inflows of home remittance, exports and FDI, besides the disbursement of the IMF SBA programme worth $3 billion has facilitated the country for large external debt repayments and supported the SBP’s FX reserves.
The country’s goods exports increased by 11.50 percent to reach $31.1 billion in FY24 compared to $27.87 billion in FY23. Goods import bill slightly increased by 1 percent to $53.167 billion in the last fiscal year. Overall goods trade deficit declined by $2.742 billion to $22.077 billion the last fiscal year.
In addition, Pakistan also posted its highest-ever export of services amounting to $ 7.8 billion in FY24, mainly driven by record-breaking technology exports, which totaled $3.2 billion.
Primary income posted a $8.623 billion deficit with $9.582 billion payments and $959 million receipts during the last fiscal year.
It may be mentioned here that recently Pakistan and IMF have reached a staff-level agreement on a 37-month Extended Fund Facility Arrangement (EFF) of about $7 billion to build the foreign reserves.
Copyright Business Recorder, 2024
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