Pakistan’s current account deficit slightly widens to $1.9b in November

• "Current account deficit widened slightly to $1.91bn in Nov as imports outstripped strong exports, robust remittances," SBP reports.
• Total exports and remittances increase by 20% and 1% on a year-on-year basis, respectively.
• SBP Governor says the current account deficit is expected to increase for the next two months and will then decrease gradually.

KARACHI: Pakistan’s current account deficit — the gap between foreign payments and inflows — edged up to $1.91 billion in November 2021, somewhat in line with the market expectations.

The current account balance recorded a surplus of $563 million in the same period of last year, the State Bank of Pakistan (SBP) reported on Monday.

In October, the deficit amounted to $1.76 billion. It was 8% lower than the deficit recorded in the month under review.

The data showed during the first five months of the current fiscal year 2021-22, the country’s deficit reached $7.08 billion compared with a surplus of $1.86 billion during the same period last year.

The central bank wrote on Twitter: “Current account deficit widened slightly to $1.91 billion in November from $1.76 billion in October as imports outstripped strong exports and robust remittances.”

It further added that imports were mainly lifted by high international commodity prices in addition to strong domestic economic recovery.

According to the post-data commentary by Arif Habib Limited on a year-on-year basis, the primary reason behind the deficit was a 57% year-on-year increase in total imports to $7.3 billion.

However, the brokerage house added that total exports and remittances also increased by 20% and 1% year-on-year, respectively.

During November, the balance of trade in goods recorded a 103% increase in deficit year-on-year, while for the services the deficit surged by 408% on a year-on-year basis.

Pakistan exported goods worth $2.71 billion compared to the imports worth $6.42 billion, while the value of exports of services clocked in at $583 million compared to $832 million in November last year.

Last week, SBP Governor Dr Reza Baqir had said that the current account deficit is expected to increase for the next two months and will then decrease gradually.

Baqir had said Pakistan wasn’t heading towards a situation where the interest rate in the country could surge to 13.52%. 

“Last time Pakistan faced such a situation was when there was a severe financial crisis in the country when the current account deficit was around $19 billion,” he had explained.