Pakistan’s current account deficit registered a massive 78% decline month-on-month, clocking in at $545 million in February 2022, the lowest in the ongoing fiscal year, showed data released by the State Bank of Pakistan (SBP) on Saturday. In January, the deficit stood at $2.531 billion.

“In February, the current account deficit fell sharply to $0.5bn, the lowest in FY22 and only one-fifth the level in January,” said the SBP.

The deficit is also the lowest since April 2021 when it was recorded at $262 million after which it gradually rose, putting pressure on the currency as well.

Cumulatively, during the eight-month period of the ongoing fiscal year (July-February of FY22), the current account deficit stood at $12.1 billion compared to a surplus of $994 million during the same eight months of the previous fiscal year (FY21), showed SBP data.

Current account deficit increases marginally to $1.93bn in December

The current account balance is a key figure for Pakistan's economy. A widening deficit in the current account puts pressure on the currency that fell to its record low against the US dollar this week. With the ongoing Russia-Ukraine conflict, oil prices have increased, putting further pressure on net oil importers like Pakistan.

However, in February, Pakistan's import bill showed some respite as the import of goods decreased to $5.166 billion, down from $6.314 billion in January.

On the other hand, Pakistan's exports of goods during the month of February stood at $2.885 billion, up from $2.497 billion in January.

Prime Minister Imran Khan, currently facing a barrage of issues on the political front as the opposition moves its no-confidence motion, in a tweet post lauded the development.

"Deficit shrank to only $0.5bn in February, $2bn lower than in January and lowest monthly deficit so far this fiscal year. Exports close to all-time high and imports down 21% from their peak and strong growth in large scale manufacturing," tweeted PM Khan.

The story was originally published in Business Recorder on March 19, 2022.