Pakistan’s current account registered a deficit of $162 million in July 2024, marking a significant 78% decrease from the $741 million deficit recorded in the same month last year, according to data released by the State Bank of Pakistan (SBP) on Monday.
“The deficit was higher than expected due to a wider trade deficit of $2.4 billion reported by the SBP for July 2024, compared to $1.97 billion reported by the Pakistan Bureau of Statistics (PBS),” noted brokerage firm Topline Securities. “Typically, SBP’s deficit figures are lower than those reported by PBS,” the firm added.
In July 2024, Pakistan’s total exports of goods and services rose by 11% to $3.013 billion, up from $2.706 billion in the same month last year. Meanwhile, imports reached $5.6 billion, reflecting a year-on-year increase of over 12%, according to SBP data.
Worker remittances for the month stood at $2.995 billion, a 48% increase from the previous year.
Factors such as low economic growth and high inflation have helped reduce Pakistan’s current account deficit, with increased exports also contributing to this improvement. Additionally, high-interest rates and certain import restrictions have supported policymakers’ efforts to narrow the deficit.
Monthly Deficit
On a month-to-month basis, Pakistan’s current account deficit decreased by 48% in July 2024, compared to a revised deficit of $313 million in June 2024, as per SBP data.
Exports of goods and services dipped by 2% from $3.081 billion in June 2024, while imports decreased by 1.3% from $5.675 billion in June 2024.
The current account balance is a crucial indicator for Pakistan’s economy, which is heavily reliant on imports. A widening deficit increases pressure on the exchange rate and depletes foreign exchange reserves.
Last month, Pakistan secured a staff-level agreement on a 37-month, $7-billion Extended Fund Facility (EFF) with the International Monetary Fund (IMF), following the conclusion of a $3-billion Stand-By Arrangement.
