Pakistan’s current account posts surplus of $128mn in February 2024

Pakistan’s current account posted a surplus of $128 million in February 2024, in contrast to a revised deficit of $303 million in the previous month, revealed data released by the State Bank of Pakistan (SBP) on Tuesday.

Overall, during the eight months of the ongoing fiscal year, the current account balance stood at a deficit of $1 billion, massively lower than $3.85 billion in the same period of the previous year.

Low economic growth along with high inflation have helped curtail Pakistan’s current account deficit with an increase in exports also helping the cause. A high interest rate and some restrictions on imports have also aided the policymakers’ objective of a narrower current account deficit.

During February 2024, Pakistan’s exports of goods and services stood at $3.18 billion, while imports clocked in at $5.06 billion.

In 8MFY24, the country’s total export of goods and services amounted to over $25.6 billion, but imports also valiantly made their way past $41 billion during the period, according to SBP data.

In its monetary policy statement on Monday, the SBP had said that the current account deficit is likely to remain closer to the lower bound of 0.5 to 1.5% of GDP forecast range for FY24, which will support the foreign exchange reserves position.

The current account is a key figure for cash-strapped Pakistan which relies heavily on imports to run its economy. A widening deficit puts pressure on the exchange rate and drains official foreign exchange reserves.

Pakistan is currently engaged in talks with the International Monetary Fund (IMF) over the second review of its nine-month Stand-By Arrangement (SBA), but the government is keen to start another longer bailout with the lender. The review, if successful, will help shore up Pakistan’s official currency reserves’ position.