KARACHI: Pakistan’s current account deficit narrowed by 313 per cent during first eight months (July – February) 2022/2023, official data revealed on Monday.
According to the State Bank of Pakistan (SBP), the current account deficit recorded at $3.86 billion during the first eight months of the present fiscal year as compared with the deficit of $12.08 billion in the corresponding period of the last fiscal year.
The sharp contraction in current account deficit may be attributed to narrowed trade deficit.
Pakistan’s trade deficit contracted by 33 per cent to $21.3 billion during first eight months (July – February) of fiscal year 2022-2023. The fiscal deficit of the country was $31.88 billion during the corresponding months of the last fiscal year, according to data released by Pakistan Bureau of Statistics (PBS).
Interestingly, both exports and imports have recorded decline during the period under review.
Exports have decreased by 8.65 per cent to $18.79 billion during first eight months of the current fiscal year when compared with $20.57 billion in the corresponding period of the last fiscal year.
Likewise, imports recorded 23.56 per cent to $40.1 billion during the period under review when compared with $52.45 billion in the same months of the last fiscal year.
The massive fall in import bill can be attributed to restrictions applied on imports during the period. The government in May 2022 imposed a ban on import of luxury and non-essential items, which was later lifted in August 2022.
However, certain conditions were remained applicable regarding opening of the letter of credit (LC) for import payment.
On the other hand, pnflows of workers’ remittances recorded a decline of 11 per cent in eight months (July – February) of fiscal year 2022-2023.
The overseas Pakistani workers sent $17.99 billion during first eight months of the current fiscal year as compared with $20.18 billion in the corresponding months of the last fiscal year.
Experts believed that the high volatile in currency market resulted fall in workers’ remittances. The flow of remittances started declining during last year when the government put a cap on exchange rate to control the dollar.
The cap which was for around five months resulted in uncertainty in the currency market. But after pressure from the IMF the government compelled the dollar to let market decide the exchange rate.