Pakistan posted a $ 1.85 billion current account deficit in fiscal year 2020-2021 due to rising crude oil prices and increased imports related to COVID19.
The deficit increased in the month of june-2021 despite the persistence of a current account surplus during the first 11 months of the previous fiscal year (July 2020 – May 2021).
According to data from the State Bank of Pakistan (SBP), the current account deficit – the difference between foreign payments and income – was $ 4.45 billion in 2019-2020.
“Pakistan’s external position is the strongest in years,” SBP tweeted on Monday. “In line with SBP expectations, the current account deficit fell to 0.6% of GDP in fiscal year 2021, the lowest in a decade, and exports and remittances are at an all-time high.”
Exports of goods from the country increased by 13.73% from $ 22.5 billion in the fiscal year 2019-20 to $ 25.3 billion in the fiscal year 2020-2021.
On the other hand, imports of goods increased 23%YoY to $ 53.8 billion. In fiscal 2020, the country imported $ 43.6 billion in goods.
In addition, the country’s Primary income fell by 14% from the previous fiscal year, leading to a widening deficit.
On monthly basis, the current account deficit widened to $ 1.6 billion in-June 2021, up from $ 650 million in May-2021, according to SBP data.
A sudden rise in Current Account deficit in the month of June-2021 pose risks to the economy as Pakistan battles to increase its foreign reserves amid absence of IMF assistance program.
Pakistan’s Foreign reserves crossed $24bn mark amid inflows from bilateral loans and Bonds from Financial Markets.
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