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Pakistan's current account deficit reduces massively to $545mn in February

CrazyZ

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Pakistan's current account deficit reduces massively to $545mn in February

  • Registers 78% decline month-on-month after clocking in at $2.53 billion in January
Ali Ahmed Updated 19 Mar, 2022


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Pakistan’s current account deficit registered a massive 78% decline month-on-month, clocking in at $545 million in February 2022, the lowest in the ongoing fiscal year, showed data released by the State Bank of Pakistan (SBP) on Saturday. In January, the deficit stood at $2.531 billion.
“In February, the current account deficit fell sharply to $0.5bn, the lowest in FY22 and only one-fifth the level in January,” said the SBP.


The deficit is also the lowest since April 2021 when it was recorded at $262 million after which it gradually rose, putting pressure on the currency as well.


Cumulatively, during the eight-month period of the ongoing fiscal year (July-February of FY22), the current account deficit stood at $12.1 billion compared to a surplus of $994 million during the same eight months of the previous fiscal year (FY21), showed SBP data.
Current account deficit increases marginally to $1.93bn in December
The current account balance is a key figure for Pakistan's economy. A widening deficit in the current account puts pressure on the currency that fell to its record low against the US dollar this week. With the ongoing Russia-Ukraine conflict, oil prices have increased, putting further pressure on net oil importers like Pakistan.

However, in February, Pakistan's import bill showed some respite as the import of goods decreased to $5.166 billion, down from $6.314 billion in January.
On the other hand, Pakistan's exports of goods during the month of February stood at $2.885 billion, up from $2.497 billion in January.

Prime Minister Imran Khan, currently facing a barrage of issues on the political front as the opposition moves its no-confidence motion, in a tweet post lauded the development.
"Deficit shrank to only $0.5bn in February, $2bn lower than in January and lowest monthly deficit so far this fiscal year. Exports close to all-time high and imports down 21% from their peak and strong growth in large scale manufacturing," tweeted PM Khan.


 

CrazyZ

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But How...
am i the only one missing something
A number of factors I think. Weak PKR is discouraging import and encouraging exports. We have finalized a barter trade mechanism with Afghanistan and Iran. Russia is offering wheat and oil on good terms. KSA is also offering support on oil as well I think.
 

GOAT

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This is incredible. I would love some more details on what is driving the shrinking of the CAD. If Pak can manage its CAD in a sustainable fashion, it can break the economic boom bust cycle!
 

CrazyZ

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This is incredible. I would love some more details on what is driving the shrinking of the CAD. If Pak can manage its CAD in a sustainable fashion, it can break the economic boom bust cycle!
I think the path is known, it just has to be implemented consistently for many years:
  • Keep PKR weak to discourage imports and encourage exports
  • Boost domestic energy and Agricultural production
  • Utilize Barter trade mechanism for needed commodities (especially with Afghanistan, Iran, and Russia). Afghanistan, Iran, and Russia have energy commodities Pakistan needs. Russia can offer grains as well. Barter trade is great for Pakistan since by its nature its a neutral exchange and has no CAD, which has been a consistent macro-economic problem for us.
 

Flight of falcon

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Get ready to readingg headlines like

“Mian Saanp is turning Pakistan into a massive import oriented consumer market and he is proud of it. “
 

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