Current account in surplus for 3rd straight month
Current Pakistan managed to post a current account surplus of $255 million for the third consecutive month in May, but this came at the expense of economic growth. The profit was primarily due to the improvement in export earnings compared to the previous month.
On Monday, the central bank announced on its official Twitter page that “the current account balance had a surplus of $255 million in May 2023 compared to $78 million in April 2023.” Overall, the current account deficit fell 80.5% to $2.94 billion in the first 11 months of the current fiscal year (July-May), compared with $15.16 billion in the same period last year, according to central bank data.
The sharp decline in the deficit came after the government and central bank curbed imports due to critically low foreign exchange reserves of about $4 billion and the risk of debt default. A significant drop in raw material imports has forced industries to shut down in whole or in part. As a result, Pakistan’s economic growth fell to just 0.3% in FY23 compared to 6.1% in the previous fiscal year.
The country’s current account deficit stood at $1.50 billion in May 2022. Merchandise exports rose to $2.59 billion in May 2023, up from $2.10 billion in April, according to central bank data. At the same time, merchandise imports stagnated and amounted to $3.78 billion in May against $3.67 billion in April.
Financial experts forecast the balance of payments to remain in surplus in June, the last month of FY23, as the government maintains its grip on imports while there is little chance of reviving the International Monetary Fund (IMF) loan program that ends in June. 30/2023.
Published in EDP BLOGS on June 22,2023.
