Pakistan’s Current Account seems to normalize, says Muzzammil Aslam

April 25, 2022 (MLN): Pakistan’s current account has been corrected massively since February. This is despite a huge build-up in energy price imports and commodity prices in general, Spokesperson of PTI on the economy, Muzzammil Aslam said.

Importantly, the non-oil current account balance is now in surplus, he added.

As per SBP, the CAD came in at $1.02bn in March, up from $519mn in February. The increase in March CAD is mainly due to the repatriation of CPEC related energy payments roughly by $300mn.

While explaining current account numbers, he said that the country is riding on all-time high monthly and yearly exports. Exports have gone past $3b billion in March first time in history and reported a growth of 27% to $23.6 billion in the first nine months of the current fiscal year.

Exports of services is another silver lining in PTI term, he said, adding that total services exports are now increased to $5.2 billion in 9 months up 17% YoY

He further stated that impressive performance in exports is undermined by substantial growth in imports. The imports surged to $53.8 billion, up 41.5% or $14.5bn

The higher imports are largely explained by three factors 1) increase in output growth, 2) higher exports, and 3) global commodity supercycle due to the re-opening of the global economy post-covid, he noted.

The massive import differential came in from additional petroleum & energy imports ($6.5bn), vaccines ($3bn), & Palm oil ($1bn). This three-combine explained that $10bn remaining $4.5 billion is due to higher machinery and quantitative imports.

Services imports also increased by $2bn to $8.3bn. This is dominated by an increase in international freights by 500%. Unfortunately, Pakistan is a net importer of shipping and airline services

“Overall, the month of March witnessed a decline in reserves of $4.6 billion in the month March due to Current Account Deficit ($1bn), Debt securities portfolio outflows ($402mn), Chinese payment of deposits ($2.3bn) & Reko Diq penalty payment ($900mn),” he said.

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