February 26, 2022: Despite high commodity prices, overall balance of payments in January 2022 declined by 44%MoM to $1.1bn compared to $1.9bn during in December, Finance Minister Spokesperson Muzzammil Aslam tweeted on Saturday.
“Imports starting to rationalising from January onwards, despite higher commodity prices. Some imports reflected in January are in kind and fully funded. This is reflected form overall balance declined by $1.09bn vs $2.55bn CAD reported in January,” he said.
Current account deficit rose to all-time high of $2.5bn in January owing to a gap in trade deficit of both goods and services to $3.9bn from $3.6bn in the preceding month. Meanwhile, slowdown in remittances (down 15%MoM) to $2.14bn in January increased pressure on the current account.
However, despite these changes, the overall balance witnessed a slowdown to $1.1bn in January 2022 compared to $1.9bn in December.
“The current account deficit rose largely due to imports in kind that are fully financed,” the State Bank of Pakistan (SBP) said on its official Twitter handle on Thursday. “Excluding these (imports in-kind), the deficit would have been around $1 billion lower in January 2022.”
Experts warn that with the Russia-Ukraine tensions taking commodity prices to new highs, the country’s FY22 CAD could rise to $18-20bn with a conservative monthly CAD estimate of $1.5bn for the period between February to June.
