Pakistan’s current account deficit fell sharply by 73% during the first five months of this fiscal year (FY20).
The country’s current account deficit stood at $1.821 billion in Jul-Nov of FY20 compared to $6.733 billion during the same period last year (FY19), depicting a remarkable decline of $4.912 billion according to the State Bank of Pakistan (SBP).
The decline was seen due to the decrease in trade deficit during the five months period.
Current Account Deficit is down by 72.6% in Nov 2019 & 73% between July-Nov 2019 vs same period in 2018.
In 5 months, increase in SBP Reserves by $1.8B & reduction of $3B in FX swaps/forward liabilities increased FX buffer by $4.8B providing further stability to external account. pic.twitter.com/TLODiizRsi
— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) December 20, 2019
However, the current account deficit for the month of November turned negative as the surplus momentum could not be maintained in November 2019 due to some decline in exports.
On a monthly basis, the current account deficit stood at $319 million in November 2019 as compared to a surplus of $70 million in October 2019. The surplus last month was the first time in nearly four years that Pakistan reported positive numbers.
The current account deficit (CAD) plunged by 73% to $319 million in November, as compared to $1,166 million in the same period last year. The decline in the current account deficit is driven by a 13% year on year decline in total imports along with a remarkable rise in the total exports.
The detailed analysis revealed a cumulative deficit of goods, services and income sector declined by 29 percent to $12.147 billion in Jul-Nov of FY20 down from $ 17.199 billion in the same period of FY19.
During the five-month period, the imports dropped to $18.31 billion as compared to $23.21 billion in the same period of the previous year. Exports, however, improved to $10.30 billion compared to $9.85 billion, according to the central bank.
During the period under review, the services trade deficit stood at $1.619 billion with $2.165 billion exports and $3.784 billion imports.
According to different analysts, improvement in goods trade deficit along with the growth in exports has resulted in a massive reduction in the current account deficit during this fiscal year.
The federal government is making efforts to bring down the current account deficit and after a long gap successfully turned the deficit into a surplus in October 2019.
You can read more details here.