KARACHI: After a surplus for three consecutive months, the country recorded a current account deficit of $ 270 million in May 2024 due to a massive surge in primary income payments.
According to the State Bank of Pakistan (SBP), the current account posted a surplus during Feb-April on the back of robust growth in remittances and exports. Current account surplus was $128 million in Feb, $619 million in March and $499 million in April 2024.
However, the current account has posted a deficit of $ 270 million in May 2024 compared to a surplus of $155 million in May 2023 as primary income payments rose significantly. Pakistan recorded the highest ever monthly outflow of $1.535 billion in the primary income account during May 2024, most likely due to dividend repatriation and interest repayments.
The current account surplus turned into deficit in May 2024, even after the arrival of the highest ever home remittances inflows. Pakistan received all time high home remittances inflows amounted to $ 3.2 billion in May 2024, however the massive increase in the primary income payments offset the surge in the workers’ remittances.
Cumulatively, the country’s current account deficit narrowed significantly by 88 percent in the first eleven months of this fiscal year. Pakistan’s external account posted $464 million deficit in July-May of FY24 compared with a deficit of $ 3.765 billion during the same period last year (FY23), depicting a decline of $ 3.3 billion.
According to SBP the resultant lower current account deficit, along with improved foreign direct investment inflows and the disbursement of SBA tranche by IMF in April, has facilitated ongoing large debt repayments and supported the SBP’s forex reserves.
The SBP said timely mobilization of financial inflows is essential to meet the external financing requirements and further strengthen forex buffers for the country to effectively respond to any external shocks and support sustainable economic growth.
During July-May, Pakistan’s import bill declined by 2 percent to $48.402 billion and exports rose by 11 percent to $28.678 billion. Month on Month basis, imports during May 2024 surged by 13 percent to reach $5 billion in May 2024 as against $ 4.4 billion in April 2024. Exports also posted 14 percent growth to stood at $3 billion in May 2024 up from $2.63 billion in April 2024.
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