Current account deficit declines by 55pc in first 2 months of FY2020

Published September 19, 2019
The CAD — for July-August period — reduces by $1.56bn to $1.29 billion from $2.85bn during the same period last year. — AFP/File
The CAD — for July-August period — reduces by $1.56bn to $1.29 billion from $2.85bn during the same period last year. — AFP/File

The current account deficit (CAD) shrank by a massive 55 per cent in the first two months of the current fiscal year as compared to the corresponding period last year, reported the State Bank of Pakistan (SBP) on Thursday.

The CAD — for the two month period — reduced by $1.56bn to $1.29 billion from $2.85bn during the same period last year.

This was in line with the downward trend witnessed throughout 2018-19 when the deficit stood lower by 31pc to $13.58bn, from $19.8bn in FY18 — recording a decrease of $6.3bn.

This must be a relief for the government which has been struggling to plug the deficit through borrowing from donor agencies, commercial banks and friendly countries.

The major cause of the shrink is the decline in the trade deficit.

According to the trade summary issued by the commerce ministry for the two months, exports jumped to $3.738bn as compared to $3.650bn during the same period last year — showing a increase of 2.41pc or $88 million.

Similarly, imports for the period under review declined to $7.553bn as compare to $9.768bn during the same period last year — showing a decline of 22.68pc or $2.215bn.

In total, the trade deficit for the two months of the current fiscal year stood at $3.815bn as compared to $6.118bn during the corresponding period last fiscal year.

The heavy reduction in CAD will also help State Bank accumulate its dollar reserves which have failed to hit double digits despite continued inflows from friendly countries and donor agencies.

Bankers say the fall in the deficit will help bring some stability to the exchange rate and provide support for both import-reliant and domestically sufficient manufacturers.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

More pledges
Updated 25 May, 2024

More pledges

There needs to be continuity in economic policies, while development must be focused on bringing prosperity to the masses.
Pemra overreach
25 May, 2024

Pemra overreach

IT seems, at best, a misguided measure and, at worst, an attempt to abuse regulatory power to silence the media. A...
Enduring threat
25 May, 2024

Enduring threat

THE death this week of journalist Nasrullah Gadani, who succumbed to injuries after being attacked by gunmen, is yet...
IMF’s unease
Updated 24 May, 2024

IMF’s unease

It is clear that the next phase of economic stabilisation will be very tough for most of the population.
Belated recognition
24 May, 2024

Belated recognition

WITH Wednesday’s announcement by three European states that they intend to recognise Palestine as a state later...
App for GBV survivors
24 May, 2024

App for GBV survivors

GENDER-based violence is caught between two worlds: one sees it as a crime, the other as ‘convention’. The ...