According to data released by the State Bank of Pakistan on Friday, Pakistan’s current account in May 2024 recorded a provisional deficit of $270 million.
This marked a sharp contrast to the revised surplus of $499 million reported in April 2024. Over the eleven months of fiscal year FY24, the cumulative current account deficit stood at $464 million, a significant reduction from $3.76 billion recorded during the same period the previous year.
The decrease in Pakistan’s current account deficit can be attributed to low economic growth and high inflation, which have helped to restrain imports while boosting exports and remittances.
Additionally, high interest rates and import restrictions have supported policymakers in achieving a narrower current account deficit.
In May 2024, Pakistan’s exports of goods and services totaled $3.69 billion, while imports amounted to $5.93 billion. Remittances during the same month were reported at $3.24 billion.
For the eleven months of FY24, Pakistan’s total exports of goods and services reached $35.81 billion, with imports totaling $57.63 billion as per SBP data. Worker remittances for the period amounted to $27.1 billion, marking an increase of nearly 8% compared to the previous year.
The current account deficit is a critical indicator for Pakistan, which heavily relies on imports to sustain its economy. A widening deficit puts pressure on the exchange rate and depletes official foreign exchange reserves.
Currently, Pakistan is in negotiations with the International Monetary Fund for a new extended bailout program to bolster its central bank’s foreign exchange reserves, which currently stand at $9.13 billion.
These discussions are crucial as Pakistan seeks external support to stabilize its economy and manage its external financing requirements.
