KARACHI: Pakistan’s current account recorded a surplus of $491 million in April compared to $134m in April of the previous year, according to data released by the State Bank of Pakistan (SBP) on Friday.

The current account surplus in March amounted to $434m, showing a positive trend.

The latest SBP data shows that the current account deficit (CAD) narrowed by 95 per cent to just $202m in the first 10 months of FY24.

This significant reduction indicates that the CAD is heading towards a negligible amount for FY24, providing substantial relief for the government amidst mounting pressure for foreign debt servicing.

Details reveal that the CAD during July-April amounted to $202m, a stark contrast to the $3.92 billion recorded during the same period in FY23.

Deficit narrows 95pc to $202m in July-April period of FY24

This achievement is particularly noteworthy for the government, which faces the daunting task of arranging $25bn for debt servicing in FY25. The government is making efforts to secure an $8bn loan from the International Monetary Fund (IMF), potentially opening up other avenues for inflows, similar to the $3bn Stand-By Arrangement (SBA) finalised at the beginning of FY24.

The significant reduction in the imports bill during the current fiscal year has been the primary driver behind the support provided to the current account surplus.

However, analysts have expressed doubt regarding the discrepancy between import reductions reported by the SBP and those reported by the Pakistan Bureau of Statistics (PBS).

According to data released by the PBS, imports declined by 4.09pc to $44.79bn in the July-April compared to $46.70bn in the same period of FY23.

Pakistan’s trade deficit decreased by 18pc to $19.5bn during July-April FY24, mainly due to the reduction in imports and an increase in exports, compared to a trade deficit of $23.53bn during the same period in FY23.

Analysts said the current account surplus would help the country to improve its ratings from international rating agencies. Most of the international rating agencies kept Pakistan at the lowest level, particularly when the country was close to sovereign default at the end of June 2023.

Published in Dawn, May 18th, 2024