Current Account Deficit Surges to Record High in November 2021

Pakistan’s current account recorded the highest deficit of $1.91 billion during the current financial year 2021-22 in November 2021 according to the statistics released by the State Bank of Pakistan (SBP) on Monday due to the soaring import bill.

According to the State Bank of Pakistan (SBP), the current account deficit further widened to $1.91 billion in November as compared to the deficit of $1.76 billion reported in October 2021.

It is pertinent to mention here that the central bank had reported a current account deficit of $1.66 billion in October 2021. However, it seems the figure was later revised.

The central bank said that imports were mainly lifted by high international commodity prices in addition to strong domestic economic recovery.

Commenting on the central bank’s figures, economist A. A. H. Soomro said that the current account deficit was reportedly less than the astronomical expectations. He said the difference was due to the recording methodology of the import data reported by SBP and the Pakistan Bureau of Statistics (PBS). The trend is not good but lesser than worst-case expectations and should be taken positively, commented Soomro.

The staggering current account deficit had posed a persistent worrisome situation for the economic managers and the banking regulator which introduced various strict measures to curb non-essential imports in the country. However, the results are yet to be seen as the import bill has remained out of control since the beginning of the current financial year.

The trade deficit of the goods and services increased by 100 percent during the period of five months, from July to November of the current fiscal year as compared to the same period in the last year. The huge deficit stood at $18.8 billion during July-November this year as compared to $9.42 billion reported in the same period of last financial year.

Meanwhile, the exports receipts of $12.3 billion stood 28 percent or $2.7 billion higher year-on-year during the period of July to November 2021.

Inflows of remittances showed a growth of over nine percent or $1.1 billion in the said period to stand at $12.9 billion this year.