Current Account Deficit Surges Over $9 Billion in H-1 FY22

The current account deficit has continued to balloon in recent months due to the higher import bill, surging over $9 billion during the first half of the current financial year 2021-22. According to statistics updated by the State Bank of Pakistan, the current account deficit has surged to $9.09 billion during the period of July to December 2021 versus the current account surplus of $1.24 billion reported in a similar period of the last financial year. Higher cost of imports on the account of petroleum products, raw materials for automobile and textile sectors, and various commodity prices have kept the imports higher which widened the trade deficit as well as the current account deficit of the country. Besides, the extra expense of vaccination imports also increased the import bill. In December 2021, the current account deficit reached the highest level of $1.9 billion in the current and previous financial years. SBP commented: The trade deficit of goods and services increased by 86 percent or $10.6 billion during the period of six months, from July to December of the current fiscal year as compared to the same period in the last year. Meanwhile, the export receipts of $15.23 billion stood 28 percent or $3.4 billion higher year-on-year during the period of July to December 2021. Inflows of remittances showed a growth of over 11 percent or $1.6 billion in the said period to stand at $12.9 billion this year. The staggering current account deficit had posed a persistent worrisome situation for the economic managers and the banking regulator which introduced various strict measures to curb non-essential imports in the country. However, the results are yet to be seen as the import bill has remained out of control since the beginning of the current financial year. In the recent annual report on The State of Economy, SBP projected that the current account deficit will settle between 2 and 3% of the GDP.