Due to the exorbitant cost of imports of petroleum products and other essential commodities during the period, the current account maintained a high deficit of $13.12 billion in the first nine months of the fiscal year 2021-22.
According to the State Bank of Pakistan (SBP), the current account deficit in March 2022 was $1.028 billion, nearly double the $519 million recorded in February 2022. The debt was $275 million last year, which was a surprisingly low figure.
Despite high global commodity prices, the current account improves, with a $1 billion deficit in March, $500 million less than the average for FY22. Furthermore, the non-oil balance remained in surplus for the second month in a row, according to the SBP.
Global oil and essential commodity prices, as well as the impact of the rupee’s depreciation against the US dollar, kept the import bill high, which was partially offset by exports and remittances. The import bill grew even larger due to Covid-19 vaccines and military purchases.
The commodity and services trade deficit increased by 56%, or $11.9 billion, from $21.2 billion in the same period last fiscal year to $33.2 billion in the current fiscal year.
Commodity import costs increased by more than 41% yearly to $51 billion from July to March of FY22. The import bill for services increased by 61 per cent year on year to $3.19 billion at the end of the first nine months of FY22.
Remittance inflows increased by 7%, or $1.5 billion, year on year, to $23.9 billion during the period. Furthermore, exports increased by 26 per cent, or $4.98 billion, year on year, to $23.6 billion during the period under consideration.
The current account deficit is expected to remain higher in the coming months, but its value may settle between $1 billion and $1.5 billion.