Pakistan’s Current Account Deficit Exceeds $9 Billion In Six Months Of FY2021-22
So far, the government’s measures to curb imports and current account deficit have ended in failure, leading to massive increase in twin deficits _ trade and current account
ISLAMABAD ( JAVED MAHMOOD )
The current account deficit has exceeded 9 billion dollars mark in first six months of the ongoing fiscal year against a surplus 1.27 billion dollars during the corresponding period last fiscal, raising alarm in the economic circles in Pakistan over massive gap in balance of payment position of the debt-trapped country.
According to State Bank of Pakistan’s latest balance of payment position, the current account deficit of Pakistan mounted to 9.25 billion dollars during July-Dec period of the fiscal year 2021-22, whereas, during the same period in 2020-21 the current account was surplus by 1.27 billion dollars.
In first six months of this fiscal, Pakistan has sustained 25.52 billion dollars trade deficit, 10.5 billion dollars over and above the trade deficit recorded in the corresponding period of 2020-21.
In first half of this fiscal, imports have widened to 36.4 billion dollars, from 23.2 billion dollars in the comparative period of the previous fiscal. Nonetheless, exports in first six months of the ongoing fiscal year amounted to 15.23 billion while imports ballooned to over 36 billion dollars.
This massive gap in the current account position and trade deficit indicate that the government’s interventions have not yielded the desired results, so far.
Earlier, Pakistan’s current account deficit has exceeded $7 billion in first five months of the ongoing financial year, 2021-22. From July-Nov 2021, the CAD amounted to $7.21 billion in comparison with a surplus of $1.76 billion. This huge current account deficit is an outcome of 18.89 billion dollars trade deficit in five months of this fiscal.
Exports during July-Nov 2021 stood at $15.05 billion while imports widened to $34.94 billion dollars. The State Bank of Pakistan has reported this negative development in its latest update about the balance of payment position of Pakistan in first five months of fiscal year 2021-22.
Despite various measures put in place to make a dent into imports and the current account deficit, the five months data of BoP indicates that the government’s strategy did not yield the desired results in November which was evident from the current account deficit. In the month of Nov-2021 alone, the imports have crossed $7 billion record level against $4.5 billion imports in the same month in 2020.
Earlier, Pakistan’s CAD had increased four-fold in first four months of the ongoing financial year which has further enlarged in the month of Nov-2021. During July-Oct FY22, the State Bank of Pakistan has reported 5.18 billion dollars current account deficit in comparison with just 1.21 billion dollars such deficit in the corresponding period of last fiscal year.
According to State Bank of Pakistan, the trade deficit of Pakistan widened to 14.84 billion dollars during July-Oct 2021 period of this fiscal, whereas in the corresponding period of last fiscal the trade deficit stood at 7.56 billion dollars. In other words, the trade deficit has expanded by almost 100 percent…..and surged to 14.84 billion dollars from 7.54 billion dollars in July-Oct period in 2020.