KARACHI: Current account deficit during the first three quarters of current fiscal year shrank by 73 per cent to $2.768 billion compared to $10.284bn in the same period last fiscal year, data released by the State Bank of Pakistan (SBP) showed on Thursday.

The current account deficit in the current and last fiscal years has fallen from its peak of $20bn in FY18 mainly on account of falling imports.

The SBP data showed the deficit in March was just $6 million compared to $283m in the corresponding month of last year.

The details showed that exports of goods during the nine months under review remained relatively unchanged at $18.256bn compared to $18.051bn last year.

However, exports during March declined to $1.818bn compared to $2.037bn in March 2019.

On the other hand, imports declined by a massive 16pc to $32.936bn compared to $39.312bn in the last year. The huge reduction in import bill has been the major driver behind sharp reduction in current account deficit.

Meanwhile, services exports fell to $4.247bn during the nine months compared to $4.566bn last year whereas imports of services also declined to $6.688bn.

The narrowing current account deficit has helped government sustain and improve its foreign exchange reserves. The inflow of remittances showed 6pc growth while foreign direct investment also increased by 137pc during the current fiscal year.

The IMF projects that after the impact of Covid 19, Pakistan’s current account deficit will be $4.5bn, or 1.7pc of GDP, by the end of the fiscal year, where it was originally projected to be $6bn, or 2.2pc of GDP.

Published in Dawn, April 24th, 2020