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Pakistan’s current account posted a surplus of $397 million in December 2023, according to data issued by the State Bank of Pakistan (SBP), showing a total surplus of $198 million in the second quarter of the ongoing fiscal year.
The data provided by the central bank shows the surplus was largely achieved due to higher exports, increased remittances, and a significant decline in imports. In contrast, per the SBP, the current account had a deficit of $365 million in December 2022. Similarly, it said, the current account deficit for the first six months of fiscal year 2023-24 was recorded at $831 million, compared to $3.63 billion for the same period last year.
Overall, the current account deficit has narrowed by 77 percent in one year, indicating that prudent economic management could see the country post an overall surplus by the end of the current fiscal year.
Pakistan spent much of 2022 and the first half of 2023 on the brink of default, as several IMF reviews were delayed, hampering the country’s ability to attract foreign direct investment or multi- and bilateral support. The process started to reverse, however, with the July inking of a $3 billion Standby Arrangement with the International Monetary Fund, which helped unlock support from Saudi Arabia and the U.A.E. In recent months, the country’s exchange rate has also largely stabilized, boosting exports, which had fallen to dangerous levels in December 2022, putting further pressure on the current account.
However, concerns persist that the policies imposed to reduce imports suggest the process could reverse if restrictions are relaxed, with experts emphasizing exports need to be increased further to avoid another massive deficit in the future.