The monthly current account deficit has shrunk to the lowest figures of $0.5 billion in February during the current fiscal year.
Prime Minister Imran Khan tweeted, “Timely actions to contain current account deficit bear fruit. The deficit shrank to only $0.5bn in Feb, $2 bn lower than in Jan & lowest monthly deficit so far this fiscal year yr (year). Exports close to all-time high & imports down 21% from their peak & strong growth in large scale manufacturing.”
According to the report, issued by the State Bank of Pakistan on Saturday, the Current Account Deficit shrank by 78.46 percent to $545 million during February from $2.531 billion in January. Along with the other factors, the big fall in imports is the main reason for the shrinking of CAD in February.
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The increasing trend of the Current Account Deficit has been the continuous source of tension for this government which is mainly due to the upward movement of the imports and rising level of global commodity prices. In January, the current account deficit was high due to the reason of external payments at the end of the year.
Due to the effective and timely measures by the government, the imports of goods and services decreased by $1.317 billion in February as compared to January. During the first eight months of the ongoing financial year, the imports enhanced by 47.7 percent to $54.986 billion as compared to $37.212 during these months, last year. However, the exports too increased by 26 percent during the period from July to February in the current fiscal, year.
The Current Account Deficit during the first eight months of this financial year stood at $12.1 billion as compared to $17.318 billion during the same period, last year. Although the prices of all the commodities at the international level went high, the rising level of prices of oil mainly caused the imbalance in the CAD of Pakistan.
The government borrowed a heavy amount to meet the alarming situation of CAD. During the current fiscal year, the government set the target of receiving $30 billion on account of foreign remittances through Pakistanis, working abroad, the situation of which is satisfactory so far. The widening level of the current account deficit in the first eight months of this fiscal year needs to be addressed by taking effective measures to arrange for big inflows.
