CAD drops by 90% on YoY Basis

ISLAMABAD: Pakistan’s current account deficit has decreased by 90% on a yearly basis and 17% on a monthly basis. The current account deficit was recorded below $250 million for the first time in 23 months, at $242 million.

Pakistan has been suffering from a chronic current account deficit problem for ages. Due to a heavy reliance on imports, Pakistan has run CADs as high as $2.4 billion in the recent past. However, due to drying up reserves and no money left to finance the imports, the country is forced to reduce its current account deficit.

According to the head of equity research at Ismail Iqbal Securities, Mr. Fahad Rauf, “This (low CAD figure) is not an achievement but a result of low reserves, down $2.5bn in Jan.”

Pakistan’s imports for the month of January were recorded at $3.92 billion which is after all the restrictions that have been placed on the imports. Multiple companies have suspended operations within Pakistan because of the government’s restriction on imports.

During January, $3.92bn worth of goods were imported, which is 7.3p% lesser than the last month. But more alarmingly, exports also declined, clocking in at $2.21 billion, down 4.29% from the preceding month’s $2.31 billion.

Meanwhile, workers’ remittances stood at $1.89 billion, declining 9.89 % compared to $2.1 billion in December.

The impact of the free float of dollar rate is yet to be observed in the remittance, import and export figures, since the decision was taken in the last week of January.