September 21, 2022 (MLN): The current account deficit for the month of August narrowed to $0.7 billion, compared to $1.21bn during July, latest data released by the State Bank of Pakistan (SBP) showed on Thursday.
"CAD fell to $0.7bn in August compared to $1.2bn in July. Cumulatively, Jul-Aug FY23 CAD declined by $0.5bn to $1.9bn compared to the same period last year mainly due to increase in exports by $0.5bn and contraction in imports by $0.2bn," the SBP said in a tweet accompanying the data release.
To note, the SBP is expecting CAD to clock in at $10bn during FY23 from $17.4bn during FY22 due to high import bill amid rising international commodity prices.
The government is targeting to rein in the widening current account deficit through curtailing imports by keeping aggregate demand in check. The government and the SBP have jointly agreed to tighten both the fiscal policy and monetary policies to reduce demand-led pressures and rein in the current account deficit.
So far during the first two months of the current fiscal year, the demand pressures seem to have subsided as sales of key eocnomic indicators like cement, automobiles, POL products and fertilizer have all witnessed a downward during the last few months.
If the government is succesfull in keeping the monthly CAD bill below $1bn mark, it could decrease the total FY23 CAD to approximately $12-13bn.