KARACHI: According to a State Bank of Pakistan (SBP) report, Pakistan’s current account surplus was recorded at $297 million in August, compared to a deficit of $601 million in the same period last year.
According to the details, the current account surplus has decreased by 71% from $508 million in July, which has been increased from the previously reported figure of 424 million.
From July to August, the total current account surplus was recorded at $805 million, with a deficit of $1.21 billion in the same period of FY20.
With the second consecutive current account increase in the new fiscal year, the country appears to have improved its external front, which ran a $20 billion deficit in the fiscal year 2018.
The key factor in turning the current account deficit into a surplus is the sharp decline in imports, although exports have declined throughout the period.
So far, all major indicators of the country’s external account have been positive besides exports, despite support and incentives from the government, as well as subsidies provided by the SBP, exports have not improved.
Exporters seek refuge in international markets from the effects of COVID-19 on the market, which affects global consumption levels and slows the growth of developed countries.
On Monday, SBP Governor Dr Raza Baqir said that one of the dangers is the possibility of a second wave of COVID-19 at the local level as there is a risk of a possible increase in winter events in major markets of Europe and the United States in Pakistan. , Both exports and imports fell 19 per cent in August.
The country also managed to receive higher remittances compared to the same period last fiscal year, which increased by 31% to $4.86 billion in the first two months of FY21.
During a press briefing on Monday, Raza Baqir dismissed the notion that the increase was due to layoffs of Pakistanis abroad. He said that the remittances in the country reached a record monthly level in July, adding that more assistance was provided to the families, especially their families affected by COVID-19 and in the last three months, it has reached $2 billion.
The SBP said in a tweet on social networking site Twitter that workers’ remittances, flexible exchange rates and efforts to attract relatively soft import prices reflect the improvement in the current account balance.
Foreign direct investment (FDI) has also helped the country reduce external expenditure and build up foreign exchange reserves to 12.5 billion, which is enough for three months of imports.
In the first two months of FY21, there was a positive trend in FDI, which increased by 40% year-on-year to $226.7 million from $162 million in the same period last fiscal.