Pakistan’s current account balance reached at a deficit of $1.85 billion in fiscal year 2020-21. Due to jump in imports on account of rise in crude oil prices and vaccine arrivals.
Current Account deficit Despite the fact that it remained in surplus in first 11 months of fiscal year ended
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 fiscal year ended. According to data of the State Bank of Pakistan (SBP), the current account deficit gap between foreign payments and foreign income had reached at $4.45 billion in fiscal year 2019-20.
Current account deficit fell to .6% of GDP, which is lowest in 10 years
It is a fact that Pakistan’s external position is very strong from many years. SBP tweeted 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 Financial year 2021 to over $17 billion – a 4.5-year high.
Increase in Exports and Imports during the financial year
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 increased from 23% to $53.8 billion in the previous fiscal year. The country had imported goods worth $43.6 billion in FY20.
Income of the country
Moreover, the basic income of the country fell by 14% during the previous fiscal year, which increased the deficit. The current account deficit increased to $1.6 billion in June 2021 compared to $650 million in May 2021.
Higher oil imports and Covid vaccines
“Exports of goods and remittances increased by $368 million and $197 million respectively,” it said. “Meanwhile, imports of goods rose by $1.4 billion”. Import bill was also larger than May due to higher oil imports and Covid vaccines.