Pakistan’s current account deficit registered a massive 45% month-on-month decrease, clocking in at $1.21 billion in July 2022 in comparison to a deficit of $2.2 billion (revised figure) in June, showed data released by the State Bank of Pakistan (SBP) on Wednesday.

"The current account deficit shrank to $1.2bn in Jul from $2.2bn in Jun, largely reflecting a sharp decline in energy imports & a continued moderation in other imports," said the SBP in a tweet.

"The narrower deficit is the result of wide-ranging measures taken in recent months to moderate growth & contain imports, including tight monetary policy, fiscal consolidation & some temporary administrative measures."

Pakistan had placed a ban on some imports, while imposing restrictions on inward shipments as well, as policymakers moved to halt the fall in foreign exchange reserves as well as the rupee value.

Data showed that imports of goods stood at $5.39 billion in July 2022, compared to $7.03 billion in June 2022. At the same time, import of services stood at $790 million in July compared to $1.32 billion in June.

Year-on-year comparison

On a YoY basis, the deficit was 42% higher.

In July 2022, the current account was in a deficit of $851 million, data showed. There was an 8% decline in remittances, which decreased to $2.524 billion in July 2022, in comparison to $2.736 billion in the same period last year. Furthermore, the import bill also witnessed a marginal increase of 0.4% YoY, clocking in at $6.175 billion in July 2022, in comparison to $6.149 billion in the same period last year.

Month-on-month comparison

In July, Pakistan's import bill of goods and services decreased to $6.175 billion, down from $8.35 billion in June, a decrease of 26%.

Govt procured $185.61m external loans in July

On the other hand, Pakistan's exports also registered a massive decline during the month of July, clocking in at $2.825 billion, down from $3.77 billion in June, a decrease of 25%.

The current account balance is a key figure for Pakistan's economy. A widening deficit in the current account puts pressure on the currency that fell to its record low against the US dollar last month. With the ongoing Russia-Ukraine conflict, prices of energy commodities and food items have increased, putting further pressure on net importers like Pakistan.

Pakistan's current account deficit hits $2.28bn in June, up 59% month-on-month