KARACHI: The current account deficit dropped by 38.6% from March to April, to $623 million, according to data released Friday by the State Bank of Pakistan (SBP).
This fiscal year, one of the biggest problems with the economy has been the growing current account deficit. Even though the deficit went down in April, the total for the first 10 months of 2021-22 was $13.78 billion. It was more than 25 times higher than the $543 million deficit from the same time last fiscal year.
The updated information shows that the current account deficit in 2020–21 was $2.82 billion, down from $4.45 billion the year before. At the start of 2021-22, the gap started to get bigger, and the highest monthly deficit was $2.53bn in January.
The biggest reason why the current account balance is getting worse is that imports went up by more than ever before and reached $69bn from July to April. Exports went up by $32.6 billion during the same time period, but imports went up by more.
During the 10-month period, the trade imbalance was the main reason why the current account deficit got bigger.
In an effort to stop money from leaving the country, the new government has just banned the import of 32 items. Higher oil prices on the world market were also a cause of the rising import bill. Because of this, Pakistan’s oil bill for this fiscal year has gone up by more than 100%.
Experts said that the recent restrictions on imports could cut the cost of imports in some ways. But things that had already been ordered would continue to come to Pakistan after the end of the current fiscal year. The ban might not change the current account deficit for 2021 and 2022.
Earlier, analysts thought that the current account deficit for 2021-22 could be between $15bn and $16bn.
When the PTI government took over in 2018, the gap was around $20 billion per year. The current account balance was bad, so the Imran Khan government had to ask for help from friendly countries and organizations that give money. At the same time, it borrowed money at market rates from the market.
The current account is likely to stay in the red until the government successfully negotiates a $1 billion loan tranche with the International Monetary Fund. It will also make other places more likely to give Pakistan loans.
Due to its weak external accounts, the country can’t sell bonds on the international market right now. This is because the rupee has lost a lot of value against the dollar. During the current fiscal year, the value of the local currency has dropped by more than 20%.
