The current account maintained a high deficit of $13.12 billion in the first nine months of the financial year 2021-22 due to the exorbitant cost of imports of petroleum products and various essential commodities during the period.
According to the State Bank of Pakistan (SBP), the current account deficit in March 2022 has been recorded at $1.028 billion which is almost double in value of $519 million seen in February 2022. Last year, the deficit stood surprisingly low at $275 million.
Despite high global commodity prices, the turnaround in the current account continues, with a deficit of $1 billion in March, $500 million lower than the average during FY22. Moreover, the non-oil balance remained in surplus for the 2nd consecutive month, the SBP commented.
The global oil and essential commodities prices along with the depreciation impact of the Rupee against the US dollar kept the import bill high which was offset to some extent by exports and remittances. The import bill was further increased due to Covid-19 vaccines and military purchases.
The trade deficit of commodities and services increased to $33.2 billion during the period July to March from $21.2 billion registered during a similar period of the last financial year, showing an increase of 56% or $11.9 billion in deficit.
The import cost of commodities surged by over 41% on a year-on-year basis to stand at $51 billion during the period of July to March FY22. The import bill of services also increased by 61% on a year-on-year basis to stand at $3.19 billion by the end of nine months of FY22.
Inflows through remittances showed an increase of 7% or $1.5 billion on a year-on-year basis to stand at $23.9 billion during the period. Moreover, exports showed an increase of 26% or $4.98 billion on a year-on-year basis to settle at $23.6 billion during the period under consideration.
It is expected that the current account deficit will remain higher in the months to come but its value might settle between $1 billion and $1.5 billion.
Source: Pro Pakistan