The current account deficit has reduced to USD 1.13 billion in September from USD 1.47 billion in August, according to a press release by the Ministry of Finance.
Overall, the deficit in the first quarter was reported at USD 3.4 billion, said the statement.
It is important to note that the surge in the import bill is due to the combination of a few one-off imports and the rising global commodities and energy prices.
Approximately, USD 400 million were spent on vaccines just in the month of September 2021, and overall, one billion dollars during the last quarter. Therefore, adjustment with vaccines import, the current account deficit for the quarter has reduced to USD 2.4 billion.
Moreover, the sudden surge in the import bill is due to an abnormal surge in commodity prices. Energy prices, including oil, LNG, and coal prices, have witnessed a sudden rise. Whereas, chemicals, steel, and food prices have also increased. However, with supply bottle-necks of the aforementioned items streamlined in the coming months, the burden on the import bill would be reduced.
On the export front, a 12.5 percent increase on a month-on-month basis was registered in September, translating to USD 2.64 billion. In the first quarter, exports recorded at USD 7 billion. It is expected that exports will be close to USD 31 billion, with services exports at USD 6-7 billion in June ending 2022.
Similarly, remittances are also on the right track and are expected to add USD 32 billion to the national reserves. Remittances, and exports of goods and services are currently expected to bring a combined revenue of USD 70 billion in FY22.
Lastly, due to a better crop outlook, the import of sugar, wheat, and cotton will witness a massive slowdown during the second half of the fiscal year. This will further reduce the imports and current account deficit.
The risk to above includes a further hike in global commodity & energy prices.