CAD drastically drops to $0.4 billion in December, SBP
Comparing Jul-Dec of FY23 to same period of FY22 CAD totaled $3.67 billion against $9.09 billion
LAHORE (Web Desk) - According to data issued by the State Bank of Pakistan (SBP) on Wednesday, Pakistan s current account deficit decreased (CAD) dramatically to $0.4 billion in December 2022 compared with $1.9 billion in the same month of the previous year.
However, the current account deficit increased $252 million in November 2022 on a month-to-month basis. Comparing July-December of FY23 to the same period of FY22 the deficit totaled $3.67 billion as opposed to $9.09 billion.
With the use of the administrative instruments at their disposal policymakers have been frantically trying to reduce the ballooning import cost. These actions have included restricting the amount of cash that may be taken out of Pakistan by passengers and delaying the issue of letters of credit (LCs).
As the disparity widens pressure is put on the currency which just had its 21st consecutive fall.
SBP faced harsh criticism on Wednesday as Karachi s business community called for an end to the LC dispute which has caused the city s industrial activity to drop by over one-fourth over the previous several months.
The changes follow a sharp decline in official foreign exchange reserves earlier this month which totaled $4.3 billion putting the balance at less than one month s worth of import coverage. It should be noted that according to international standards, there should be enough government reserves to cover imports for three months.
Pakistan estimated its FY23 financial needs based on a CAD of $10 billion. However the deficit for the first half of FY23 has stayed below $4 billion.