Current account deficit narrows to $3.67 billion in six months: State Bank

KARACHI: The State Bank of Pakistan (SBP) has said that the current account deficit narrowed to $3.67 billion in the first six months (July-December) of the fiscal year 2022/23.

The current account deficit was recorded at $9.1 billion in the same months of the last fiscal year, showing that it narrowed 59 per cent during the period under review.

The import bill is the major component in reducing the current account deficit. Since May 2022, the government has imposed various restrictions to discourage imports.

The import bill fell 23 per cent to $31.38 billion during the first half of the current fiscal year, compared with $40.56 billion in the corresponding half of the last fiscal year, according to the Pakistan Bureau of Statistics.

At present, the trade and industry is agitating the government policies regarding import restrictions. Industrialists said that due to restrictions the production activities had come to a halt.

The restrictions on the import payments prevented the clearance of raw materials, which were vital for the export-oriented sector.

Therefore, this resulted in a decline of 6 per cent to $14.25 billion in exports during the period under review, compared with $15.13 billion in the same period of the preceding fiscal year.

The significant decline in the import bill resulted in a sharp contraction in the trade deficit during the period under review. The trade deficit narrowed 33 per cent to $17.13 billion during July-December of the fiscal year 2022/23, compared with the deficit of $25.44 billion in the corresponding period of the last fiscal year.

Meanwhile, the inflows of the workers remittances declined 11 per cent in the first half (July-December) of the fiscal year 2022/23.

The SBP received $14.05 billion during the first half of the current fiscal year, compared with an inflow of $15.81 billion in the corresponding period of the last fiscal year.

The current account deficit for December 2022 was recorded at $400 million, compared with the deficit of $1.86 billion in December 2021 and the deficit of $252 million in November 2022.

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