Current account in surplus for 3rd straight month
Photo: file
Pakistan managed to achieve a current account surplus for the third consecutive month in May, which stood at $255 million, but it came at the cost of economic growth.
The surplus mainly stemmed from the improvement in export earnings compared to the previous month.
The central bank announced on its official Twitter handle on Monday that the “current account balance recorded a surplus of $255 million during May 2023 compared to $78 million in April 2023.”
Overall, the current account deficit for the first 11 months (Jul-May) of the outgoing fiscal year contracted 80.5% to $2.94 billion compared to $15.16 billion in the same period of last year, according to the central bank data.
The significant reduction in the deficit came after the government and the central bank curbed imports owing to the critically low foreign exchange reserves, which currently stand at around $4 billion, and the risk of debt default.
A massive reduction in the import of raw material forced industries to shut down partially or completely. As a result, Pakistan’s economic growth dropped to just 0.3% in FY23 compared to 6.1% in the previous fiscal year.
The country had posted a current account deficit of $1.50 billion in May 2022.
The central bank data showed that the export of goods increased to $2.59 billion in May 2023 compared to $2.10 billion in April.
The import of goods, however, remained stagnant at $3.78 billion in May compared to $3.67 billion in April. The inflow of workers’ remittances ticked down to $2.10 billion in the month under review compared to $2.19 billion in April.
Financial experts projected that the current account would remain in surplus in June, the last month of FY23, considering the government would maintain its control over imports amid slim chances of revival of the International Monetary Fund’s (IMF) loan programme, which is ending on June 30, 2023.
Published in The Express Tribune, June 20th, 2023.
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