Current account deficit nearly erased, stands at just $8m

October 19, 2023 (MLN): The current account deficit for September 2023 shrank significantly by 95.1% MoM to stand at just $8 million compared to the deficit of $164m in August 2023, the latest data issued by the State Bank of Pakistan (SBP) revealed today.

While in the same month last year, the country recorded a current account deficit of $360m, depicting an improvement of 97.8% YoY.

Total exports rose by 0.63% MoM and 1.43% YoY to $3.045bn as compared to the total exports of $3.026bn in the previous month and $3bn in the same month of last year.

Total imports fell by 5.93% MoM to $4.77bn as compared to the imports worth $5.07bn recorded in August, while the imports showed a decline of 14.5% YoY when compared to the numbers of September of last year.

Meanwhile, on a cumulative basis, the current account deficit in the first quarter of FY24 was recorded at $947m, showing a significant improvement of 58.06% YoY when compared to the deficit of $2.26bn in 1QFY23.

Furthermore, the workers' remittances improved by 5.3% MoM to $2.21bn as compared to $2.01bn in the previous month; while on a yearly basis, the remittances went down by 11.3% YoY as it stood at $2.49bn in September 2022.

Cumulatively in the first quarter of FY24, workers' remittances were recorded at $6.33bn as compared to $7.9bn in 1QFY23, depecting a fall of 19.82% YoY.

To note, remittances in the previous month dropped on account of increased disparity between official and grey market rates, as many non-resident Pakistanis preferred to use unofficial channels, which offered Rs20-25 higher exchange rate per dollar.

In response to these challenges, the authorities, led by the army, began crackdowns against speculators, hoarders, and smugglers to restrict illegal dollar outflows and effectively strengthening the PKR against the USD.

However, despite these measures, inflows were recorded at lesser than the street expectations for the month.

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