Pakistan's current account deficit falls 'sharply' to $0.5bn — lowest in FY22

• “Timely actions to contain current account deficit bear fruit," PM Imran Khan tweets.
• Deficit shrinks to only $0.5bn in Feb, $2bn lower than in January.
• The deficit is the lowest monthly deficit so far [in this] fiscal year.

ISLAMABAD: Pakistan’s current account deficit — the gap between the country’s higher foreign expenditure and low income — fell sharply to $545 million ($0.5 billion) in the wake of timely actions taken by the government and relevant ministries.

According to the data released by the central bank on Saturday, the current account deficit fell “sharply” to $0.5 billion — the lowest in FY22 and only one-fifth the level in January.

Meanwhile, Prime Minister Imran Khan said “timely actions” to contain the soaring current account deficit have borne fruit.

Taking to his official Twitter handle, the premier wrote: “Timely actions to contain current account deficit bear fruit.”

“Deficit shrank to only $0.5 billion in February, $2 billion lower than in January [and] lowest monthly deficit so far [in this] fiscal year,” he tweeted.

The SBP further reported that exports were close to an all-time high, rising to 16% compared to January while imports fell by 18% to their highest lowest level in FY22.

The premier also mentioned that exports are also close to all-time high [and] imports down 21% from their peak [and] “strong growth in large scale manufacturing.”

According to the Pakistan Bureau of Statistics (PBS), the large-scale manufacturing sector’s (LSM) output grew 8.2% in January.

On a year-on-year basis, the primary reason behind the deficit was a 16% year-on-year increase in total imports to $6 billion along with a 3% decline in remittances to $2.2 billion.

However, total exports also increased by 29% year-on-year.

During the eight months of the fiscal year 2021-22, the country’s deficit reached $12.1 billion compared with a surplus of $994 million during the same period last year.

It is pertinent to mention here that in January, Pakistan’s current account deficit widened to a 13-year high of $2.6 billion in the wake of a surge in import payments due to rising commodity prices in the international market.

Last month’s deficit was the highest-ever monthly current account deficit. The last time the figure was this high was back in October 2008 when it was $2.03 billion.

Earlier, the PBS had reported that the trade deficit remained significantly high at $32 billion in the first eight months of the current fiscal year as the pace of increase in exports stood at nearly half of the surge in imports, making the government’s external position vulnerable.