Data from the State Bank of Pakistan (SBP) on Monday showed that Pakistan’s current account recorded a deficit of $162 million in July 2024, a whopping 78% lower than the deficit of $741 million in the same month of the previous fiscal year.
“The deficit was higher than expected due to the higher trade deficit of $2.4 billion reported by the SBP in July 2024, compared to $1.97 billion reported by the Pakistan Bureau of Statistics (PBS),” brokerage Topline Securities said in a statement.
“Normally, the SBP deficit figures are lower than those of the PBS,” it said.
Pakistan’s current account deficit of USD 681 million in FY24
In July 2024, the country’s total exports of goods and services amounted to $3.013 billion, up 11% from $2.706 billion in the same month last year.
Meanwhile, imports stood at $5.6 billion in July 2024, up over 12% year-on-year, according to SBP data.
Workers’ remittances amounted to $2.995 billion, an increase of 48% over the previous year.
Low economic growth and high inflation have helped to narrow Pakistan’s current account deficit. An increase in exports has also contributed. A high interest rate and some import restrictions have also supported the policymakers’ goal of narrowing the current account deficit.
Monthly deficit
As per SBP data, Pakistan’s current account declined by 48% on a month-on-month basis in July 2024, compared to a revised deficit of $313 million in June 2024.
Pakistan’s exports of goods and services decreased by 2% compared to $3.081 billion in June 2024, while imports decreased by 1.3% compared to $5.675 billion in June 2024.
The current account is a key figure for financially weak Pakistan, whose economy is heavily dependent on imports. A growing deficit puts pressure on the exchange rate and reduces official foreign exchange reserves.
Last month, Pakistan managed to reach a staff-level agreement with the International Monetary Fund (IMF) for a 37-month, $7 billion Extended Fund Facility (EFF), just months after the earlier completion of a $3 billion stand-by arrangement.