The country's current account deficit plummeted by 68 per cent to $3.8 billion during the first eight months of the current fiscal year (FY23) from $12bn during the same period in FY22.
In February this year, the CAD dropped to just $74 million against $519m last year, the lowest monthly deficit recorded since February 2021.
The deficit declined by 86pc on a year-on-year (YoY) basis, official data shows.
The decline in the CAD was owing to a fall in imports while no higher exports or inflows were noted. Though the balance of payment reflected a healthy sign for improvement in the external front of the country’s economy, the government is unable to meet even this decreasing CAD due to extremely poor foreign exchange reserves.
The February deficit was even much lower than January’s $230m. The decline made a trend for the CAD during FY23 and may end up with much lower deficit compared to last year. The CAD stood at 17.4bn during the last fiscal year (FY22).
Pakistan earns $1,523 million from IT services' export
This figure is a real problem for the country as the International Monetary Fund (IMF) has been asking the government to arrange the amount needed to meet the CAD by the end of FY23.
Pakistan got much-needed support from China which provided two tranches of $700m and $500m to improve the country’s foreign exchange reserves that stood at $4.3bn by March 10 this year.
Imports of goods during the first eight months of FY23 stood at $37.88bn, while exports during the same period were $18.639bn. The import of services during this period was $5.118lbn against the export of services at $4.778bn.
Despite a massive decline in the CAD, the government is unable to meet the deficit due to large trade deficit.
Imports of goods during the first eight months of FY23 fell by almost $10bn and exports by around $2bn. The poor exports with much higher imports did not allow the country to find a balance on its external front.