KARACHI: The country’s current account has improved significantly and recorded a $ 397 million surplus in December 2023.
Previously, the current account also showed a surplus of $ 9 million in Nov 2023, however, in the latest revised data of the State Bank of Pakistan (SBP), Nov 2023 surplus has turned down to a deficit of $ 15 million. Therefore, first current account surplus for FY24 is recorded in Dec 2023.
According to SBP, the country’s current account balance posted a surplus of $ 397 million in Dec 2023 compared to a deficit of $ 365 million in Dec 2022.
Analysts said that the surplus was supported by a trade deficit reporting almost $ 1 billion lower quantum than home remittances, a massive gap witnessed after 6 months. During Dec 2023, trade deficit was reported at $ 1.3 billion as against $ 2.4 billion workers’ remittances.
The imports declined by 3.6 percent YoY to $ 4.092 billion similarly exports posted an increase of 21 percent to $ 2.78 billion in Dec 23.
During the first quarter (July-Sep) of this fiscal year (FY24), the current account was in deficit of $ 1.029 billion, however, in the second quarter (Oct-Dec) of FY24, the current account recorded a surplus of $ 198 million. Cumulatively, the current account deficit also fell sharply 77 percent during the first half this fiscal year. Current account posted a $ 831 million deficit in July-Dec of FY24 compared to a deficit of $ 3.629 billion in the same period of last fiscal year (FY23), depicting a decline of $ 2.798 billion.
Analysts said that the current account surplus in Dec 2023 is a good sign for the country’s external account, improving import cover from a recent low of
1.6x to now 1.9x. Pak rupee to the dollar has also gained 7 percent during this fiscal year. However, they warned that any delay in fresh arrival of inflows may put some pressure on Pak rupee against the US dollar.
The SBP statistics revealed that lower import bill and growth in exports has largely contributed to the sharp decline in the current account deficit. The country’s exports posted 7 percent growth to reach $ 15.289 billion in July-Dec of FY24 up from $ 14.223 billion in corresponding period of last fiscal year. In addition, the country’s imports declined by 15 percent to $ 25.241 billion in the first half of this fiscal year as against $ 29.589 billion in the same period of last fiscal year.
It may be mentioned here that SBP in its last 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 a downward trend, while exports are inching up on the back of food items.
The IMF has also release of the second tranche of $ 700 million on Wednesday under the Extended Fund Facility (EFF) programme. The arrival of this tranche will also help to build the country’s foreign exchange reserves.
Copyright Business Recorder, 2024
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