External sector under pressure as current account deficit swells to $1.03tn in March – Latest News – The Nation
The current account deficit of ISLAMABAD-Pakistan was recorded at $1.03 billion in the previous month of March 2022, indicating that there is pressure on the external account sector.
According to the latest data from the State Bank of Pakistan, the country’s trade deficit in March this year was recorded at $1.03 billion compared to $369 million in the same period of the previous year. Meanwhile, on a monthly basis, the current account deficit ballooned by 98% to $1.03 billion in March 2022 from $519 million in February this year. The SBP said it was satisfied with the current account deficit figures in March. “Despite high global commodity prices, the current account recovery continues, with a deficit of $1 billion in March, $500 million less than the FY22 average. non-oil remained in surplus for the 2nd consecutive month,” the central bank said on social media.
Meanwhile, cumulatively, the current account deficit was recorded at $13.17 billion for nine months (July to March) of the current fiscal year compared to $275 million in the corresponding period of the year. previous. SBP data showed that foreign remittances were recorded at $22.952 billion in the nine months of the current fiscal year, compared to $21.436 billion in the same period a year earlier. Meanwhile, the country’s imports were recorded at $53.796 billion from July to March of the year 2021-22, compared to $38.062 billion in the same period last year. Merchandise exports were recorded at $23.699 billion during the review period, compared to $18.713 billion in the previous year.
The country’s external sector is under pressure as foreign exchange reserves are depleted due to the repayment of previous borrowings and the financing of the current account deficit. The local currency is under pressure as the dollar value jumped above Rs187 again. Meanwhile, the newly elected government is working to revive the stalled lending program with the International Monetary Fund (IMF). The Pakistani economic team led by Federal Minister of Finance and Revenue Miftah Ismail is in Washington for talks with the Fund. A successful relaunch of the International Monetary Fund’s (IMF) Extended Financing Facility (EFF) of $6 billion would pave the way for an inflow of at least $1 billion.
The International Monetary Fund (IMF) has estimated a higher-than-expected current account deficit in the current fiscal year. He projected Pakistan’s current account deficit to 5.3% of GDP (compared to just 0.6% the previous year). The Fund also estimated that the current account deficit will fall to 4.1 percent of GDP in FY23.