The country’s current account deficit (CAD) was recorded at $1.2 billion in July 2022 as compared to $2.2 billion in the same period of the previous year, showing massive decline of 45.45 percent, according to the latest data of the State Bank of Pakistan (SBP). The CAD has contracted mainly due to the government’s measures to control the imports by imposing ban on luxury items and others.
The SBP has stated that the current account deficit shrank to $1.2 billion in July from $2.2 billion in June, largely reflecting a sharp decline in energy imports & a continued moderation in other imports. “The narrower deficit is the result of wide-ranging measures taken in recent months to moderate growth & contain imports, including tight monetary policy, fiscal consolidation & some temporary administrative measures,” the SBP said in tweet.
Pakistan’s exports of goods increased from $ 2.235 billion in July 2021 to $2.295 billion in July this year. The imports enhanced from $5.371 billion to $5.385 billion in the period under review. The overall trade deficit has shrunk to $3.090 billion compared to the deficit of $3.136 billion in July 2021. Meanwhile, the trade deficit in services has also shrunk to $260 million in July compared to the deficit of $287 million in same month of previous year. The combined deficit of goods, services, and primary income increased to $3.753 billion in the corresponding month while during same month of last year, the deficit was recorded at $3.712 billion.
However, the current account deficit increased 42 percent on year-on-year. A deficit of $851 million was reported in July 2021 compared to $1.1 billion this year. The federal government and State Bank of Pakistan had taken measures to control soaring imports after country recorded massive current account deficit of $17.4 billion in the previous fiscal year that ended on June 30. The government had banned non-essential and luxury items to control the imports. However, it lifted the ban in last week to comply with the directions of the International Monetary Fund (IMF) and under the agreement with World Trade Organization (WTO). In order to control imports, the Federal Board of Revenue (FBR) has imposed/raised time-bound regulatory duties and Additional Customs Duties (ACDs) on the import of over 600 luxury and non-essential items.