ISLAMABAD - Pakistan’s current account deficit has remarkably shrunk by 42 percent in August mainly due to the measures taken by the government to curtail the imports of the country.
The current account deficit (CAD) has been recorded at $0.7 billion in August this year as compared to $1.2 billion in July showing decline of 42 percent. “Current Account Deficit (CAD) fell to $0.7 billion in August compared to $1.2 billion in July. Cumulatively, Jul-Aug FY23 CAD declined by $0.5 billion to $1.9 billion compared to the same period last year mainly due to increase in exports by $0.5 billion & contraction in imports by $0.2 billion,” said State Bank of Pakistan in a brief statement on twitter on Thursday. The incumbent government has adopted the policy to curtail the soaring imports, which had gone to highest ever $80 billion in the previous fiscal year. Pakistan posted a massive current account deficit of $17.3 billion in the previous fiscal year. Initially, the government had imposed ban on the import of luxury and non-essential items. However, later, it had lifted ban on all other items excluding import of vehicles mobile phones and some others. The Ministry of Finance and SBP are following tight monetary policy, fiscal consolidation and some temporary administrative measures.
The SBP data showed the balance of trade in goods and services also declined by 0.54 percent month-on-month to $3.298 billion. During August, imports of goods stood at $5.75 billion, compared to $5.35 billion in the preceding month. On the other hand, exports increased significantly to $2.81 billion, jumping 23.38 percent from $2.28 billion in July. Workers’ remittances clocked in at $2.72 billion compared to $2.52 billion in the previous month.
Cumulatively, the country recorded a current account deficit amounting to $1.92 billion in first two months (July-August) of FY23 compared to $2.374 billion in the same period of last fiscal year, depicting a decline of $456 million. During the first two months of this fiscal year, imports recorded a decline of $240 million to $11.98 billion. However, exports posted an increase of $519 million to $5.093 billion in 2 months.