KARACHI: Against a backdrop of increasing imports, the country posted a current account deficit (CAD) of $ 773 million in the first month of 2021-2022 against a surplus of $ 583 million in July 2020.
Data released Friday by the State Bank of Pakistan (SBP) showed that the country’s current account had been in deficit since December 2020. In January, it was $ 229 million, February $ 50 million, $ 47 million. in March and $ 188 million in April, but in May it widened to $ 650 million and jumped to $ 1.6 billion in June, allowing the country to end fiscal 21 with a CAD of $ 1.8 billion.
The rapid increase in imports was the real reason for the current account deficit in July, according to data from the SBP. The import bill jumped to $ 5.396 billion in the first month, from $ 3.557 billion in the same month of fiscal year 21. Exports also increased, but not very significantly, to reach $ 2.257 billion in July from 1.885 billion. billion dollars in July 2020.
However, the July deficit was well below the $ 1.6 billion noted in June. The SBP said that the CAD’s rise in June was mainly due to part of the increase in seasonal imports, associated with the consolidation of year-end payments. The import bill was also higher than in May due to increased imports of petroleum and Covid vaccines.
The imbalance in trade in goods in July was $ 3.139 billion against $ 1.672 billion in July 2020.
“This is in line with expectations of a current account deficit of 2-3% of GDP as the economy actively continues to grow,” a State Bank tweet said on Friday.
Despite the widening of the CAD, the SBP’s foreign exchange reserves position continued to strengthen on a monthly basis. This contrasts with past trends and is supported by the country’s market-based exchange rate system, he added.
SBP Governor Dr Reza Baqir recently said the DAC will be in the range of 2-3% of GDP in FY22. He said this will happen due to the increase in imports, as the economy began to operate on a larger scale.
Fiscal 21 ended with a significant C $ 1.8 billion, but that was significantly less compared to FY20’s $ 4.449 billion.
In FY21, the country received $ 29.4 billion in remittances, 27% more than the previous year. Remittances in July remained intact as they stood at $ 2.7 billion, slightly lower than the previous year. The State Bank said it would take about $ 20 billion to repay the debt in the current fiscal year.
Recently, the SBP also said that the CAD in FY21 was the lowest in 10 years, adding that the country’s international investment position was at its highest level in many years with remittances at a low. All-time high, the central bank’s foreign exchange reserves rose from $ 5.2 billion in FY21 to more than $ 17 billion, a four-and-a-half-year high.
According to SBP, the merchandise trade balance in fiscal year 21 was in deficit of $ 28.155 billion against a deficit of $ 21.109 billion for fiscal year 20. Imports reached $ 53.785 billion against $ 25.63 billion. dollars in exports, leaving a trade gap of $ 28.2 billion.
Posted in Dawn, le 21 August 2021