- Pakistan’s current account deficit increased to $2.3 billion in June 2022 from $1.6 million in the previous year.
- The current account deficit for fiscal years 2021 and 2022 as a whole increased by 517 percent.
- A widening deficit causes US dollars to leave Pakistan, which has a negative impact on the country’s currency.
Despite increased exports and remittances, Pakistan’s current account deficit—the difference between the nation’s high external expenses and low income—grew to $2.3 billion in June 2022.
The State Bank of Pakistan reports that the country’s current account deficit increased to $2.3 billion in June 2022 from a deficit of $1.6 million in the corresponding month of the previous year.
The current account deficit for fiscal years 2021 and 2022 as a whole increased by a staggering 517 percent, coming in at $17.4 billion annually as opposed to the figure of $2.82 billion for FY21.
The current account deficit increased to $2.3 billion in June despite stronger exports and remittances, the central bank reported on its official Twitter account. This was predicted by earlier Pakistan Bureau of Statistics (PBS) statistics.
The SBP added that the “deficit is projected to resume its reducing trajectory” and that “oil imports are significantly lowered so far in July.”
1/2 As foreshadowed by earlier PBS data, a surge in oil imports saw CAD rise to $2.3bn in Jun despite higher exports & remittances. So far in Jul oil imports are much lower & deficit is expected to resume its moderating trajectory. Visit #EasyData https://t.co/q3LNv3HgLs pic.twitter.com/lvwO9Bo3PJ
— SBP (@StateBank_Pak) July 27, 2022
It was stated that 3.3 million metric tons of oil were imported in June, which represented an increase of 33% from May.
The SBP stated that “along with increasing world prices, this more than quadrupled the oil import bill from $1.4 billion to $2.9 billion,” adding that non-oil imports were somewhat declining.
According to the balance-of-payments summary’s details, Pakistan exported commodities worth $3.12 billion and services worth another $646 million.
The current account deficit was caused by a sizable import bill in June, which totaled $7.04 billion for goods and an additional $1.37 billion for services.
‘Oil import expense increases to uncomfortably high levels’: Economist
A widening deficit causes US dollars to leave Pakistan, which has a negative impact on the country’s currency, which is now trading at a historic low of Rs236.02 against the US dollar.
It should be mentioned that the current account balance is an essential indicator of Pakistan’s economy.
According to Dr. Khaqan Najeeb, an economist and former Ministry of Finance adviser, the current account deficit will reach $2.3 billion in June 2022 as a result of an increase in imports of petroleum goods.
He emphasized that in June, the cost of oil imports alone increased to a “very uncomfortable level” of $2.9 billion.
According to the economist, under a market-based exchange system with minimal SBP intervention, last fiscal year 2021–2022 ended with a greater current account deficit of $ 17.4 billion, which had an impact on the depreciation of the Pakistani rupee versus the dollar.
Dr. Najeeb expected that the current account deficit in July would decrease since more oil than was necessary had been imported and demand had slowed.
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