Pakistan’s current account recorded a deficit of $1.85 billion in fiscal year 2020-21 owing to a jump in imports on account of rise in crude oil prices and vaccine arrivals.
The deficit came despite the fact that the current account remained in surplus in the first 11 months (July 2020 to May 2021) of the previous fiscal year.
According to data of the State Bank of Pakistan (SBP) compiled in a report by The Express Tribune, the current account deficit – gap between foreign payments and income – had stood at $4.45 billion in fiscal year 2019-20.
“Pakistan’s external position is at its strongest in many years,” remarked the SBP in a tweet on Monday. “In line with SBP’s projections, the current account deficit in FY21 fell to only 0.6% of GDP, which is the lowest in 10 years, with exports and remittances at all-time highs.”
It said that foreign exchange reserves rose by $5.2 billion in FY21 to over $17 billion – a 4.5-year high.
Exports of goods from the country increased 13.73% from $22.5 billion in fiscal year 2019-20 to $25.3 billion in fiscal year 2020-21.
On the other hand, imports of goods spiked 23% to $53.8 billion in the previous fiscal year. The country had imported goods worth $43.6 billion in FY20.
In addition, the primary income of the country fell 14% during the previous fiscal year, which widened the deficit.
According to the SBP, the current account deficit widened to $1.6 billion in June 2021 compared to $650 million in May 2021.
“Exports of goods and remittances increased by $368 million and $197 million respectively,” it said. “Meanwhile, imports of goods rose by $1.4 billion.”
It added that some of the rise in imports was seasonal and it was associated with the bunching of year-end payments.
Import bill was also larger than May due to higher oil imports and Covid vaccines.