Karachi, September 14, 2023 – Pakistan’s current account deficit (CAD) has seen a substantial reduction of 54 percent during the first two months of the fiscal year 2023-24, according to data from the State Bank of Pakistan (SBP).
The CAD narrowed to $935 million in the months of July and August 2023, compared to $2.035 billion during the same period in the previous fiscal year. This significant improvement in the CAD can be attributed to a notable decline in the country’s import bill.
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Data released by the Pakistan Bureau of Statistics (PBS) reveals that the import bill for the first two months of the current fiscal year fell to $8.19 billion, marking a 26 percent decrease from the $11.03 billion recorded in the corresponding months of the previous fiscal year.
However, Pakistan’s exports also experienced a decline of 6.38 percent, amounting to $4.43 billion during the same period, compared to $4.73 billion in the first two months of the fiscal year 2022-23. Despite this decline in exports, the significant reduction in imports has led to a substantial decrease in the trade deficit.
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The trade deficit for July and August 2023 narrowed by 40 percent to $3.76 billion, compared to a deficit of $6.30 billion in the corresponding months of the previous fiscal year.
It’s worth noting that the CAD could have seen even further improvement if the inflow of remittances had performed more robustly. Remittances recorded a decline of 21 percent, totaling $4.12 billion during the first two months of the current fiscal year, compared to $5.26 billion in the same period of the previous fiscal year.
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Pakistan faces challenges in its balance of payments, and the reduction in the CAD is a positive development that will contribute to better management of the country’s external sector. The narrowing CAD indicates progress in stabilizing Pakistan’s trade and financial position, although sustained efforts will be required to address broader economic challenges.
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