Pakistan records first current account surplus since June

WEB DESK: In a noteworthy turnaround, Pakistan’s current account, after enduring four consecutive months of deficits, reported a surplus of $9 million in November 2023.

This marks a significant departure from the $157 million deficit recorded in the same month of the previous year, as per data unveiled by the State Bank of Pakistan (SBP) on Monday.

Current Account Deficit improved significantly to $1.16 billion in Jul-Nov FY24, from $3.26 billion in Jul-Nov FY23.https://t.co/q3LNv3HOB0https://t.co/Od8ikVvXrd#SBPBOP pic.twitter.com/MpkC0gTj4l

— SBP (@StateBank_Pak) December 18, 2023

This development signals the first surplus since June 2023, though the current figure is substantially lower compared to the $520 million surplus at that time.

Analysts attribute this surplus to a notable uptick in the country’s exports and remittances, coupled with a slight dip in imports. Notably, Pakistan recorded a current account deficit of $184 million in October 2023.

According to central bank data, the country’s exports (goods and services) surged to $3.364 billion in November 2023, up from $2.999 billion in November 2022, reflecting a robust 12 per cent increase.

Simultaneously, remittances for November 2023 stood at $2.25 billion, compared to $2.17 billion in the same month last year, showing a marginal 4 per cent uptick.

Conversely, total imports experienced a nearly 6 per cent decline, amounting to $5.29 billion in November 2023 versus $5.01 billion in the corresponding period last year.

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The SBP reports that Pakistan’s current account deficit for July–November of FY24 was $1.16 billion, a substantial reduction from the $3.3 billion deficit during the same period in the last fiscal year (FY23), marking a decline of over $2 billion, or 64 per cent.

Addressing this positive trend, the central bank’s latest Monetary Policy Committee (MPC) meeting on December 12 acknowledged a substantial improvement in the current account balance, with the deficit narrowing by 65.9 per cent year-on-year to $1.1 billion during July-October FY24.

The current account holds significant importance for economically challenged Pakistan, which is heavily reliant on imports.

A widening deficit exerts pressure on the exchange rate and depletes official foreign exchange reserves, currently standing at just over $7 billion, as per the latest available data.