On Sunday, the State Bank of Pakistan (SBP) posted a tweet announcing the witnessed surplus in the current account of $881 million, against a deficit of $2,741 million during July-Feb FY21. Therefore, it can be said that Pakistan’s closing current account deficit number was registered as positive for the last 8 months of the current fiscal year in contrast to the previous one.
The current account is an essential rule to measure the vitality of a country’s economy. It marks the dollar transactions of a country with the rest of the world. In the case of Pakistan, it is normally in shortfall or loss as the country spends more money than it earns.
Furthermore, the central bank credits the surplus to growth in the worker’s remittances, and further informed in the tweet that “a sustained recovery in exports since Nov20 in year-on-year terms, which more than offset the increase in imports due to domestic food shortages and recovering economic activity.”
In addition to it, significant growth in IT exports would also play a part in bringing down the current account deficit.
The worker remittances, which include the Pakistani freelancers’ incomes and funds transferred by Pakistanis residing abroad, and were accredited by the SBP as an important reason behind the surplus, also increased from $15 billion to $18.7 billion. The accurate data and figures issued by the State bank are available here.
In contradiction to the past five years, the current account had been in surplus in the current fiscal year except for December. As per SBP, this is caused due to an improved trade balance and maintained progress in remittances. In November, both exports and imports picked up, indicating a resurgence in external demand and internal economic activity. Though, imports had been higher and dominated exports and remittances in December.