Key Takeaways:
– Pakistan’s current account deficit for FY2023-2024 decreased by 79% compared to the previous year.
– The deficit now stands at $681 million, or 0.2% of GDP, the lowest in 13 years.
– A reduction in the trade deficit and an increase in remittances contributed significantly to this improvement.
Pakistan’s current account recorded a deficit of $681 million for the fiscal year 2023-2024, marking a substantial 79% reduction from the $3.275 billion deficit in the previous fiscal year. This data was released by the State Bank of Pakistan (SBP) on Friday.
The current account deficit (CAD) now represents 0.2% of the country’s GDP, the lowest figure in the past 13 years, according to the SBP report. The significant reduction in the CAD was primarily driven by a 6% decrease in the trade deficit and an 11% rise in remittances.
During FY24, Pakistan’s total exports of goods and services reached $38.9 billion, while imports amounted to $63.3 billion. Worker remittances increased to $30.25 billion, reflecting an 11% growth compared to the same period last year.
On a monthly basis, Pakistan’s current account showed a provisional deficit of $329 million in June 2024, compared to a revised deficit of $248 million in May 2024. In June 2024, exports of goods and services stood at $3.07 billion, while imports were $5.69 billion. Remittances for the same month were $3.16 billion.
The decrease in the current account deficit is crucial for Pakistan, a nation that heavily relies on imports to sustain its economy. A larger deficit exerts pressure on the exchange rate and depletes foreign exchange reserves. Low economic growth and high inflation have also helped reduce the deficit, alongside increased export levels.
Last week, Pakistan secured a 37-month, $7 billion Extended Fund Facility (EFF) just months after completing a $3-billion Stand-By Arrangement, providing some financial relief to the cash-strapped country.
