Current account deficit falls by 68 percent

Current account deficit falls by 68 percent

The country's current account deficit plummeted by 68 per cent to $3.8 billion during the first eight months of the current fiscal year (FY23) from $12bn during the same period in FY22.

In February this year, the CAD dropped to just $74 million against $519m last year, the lowest monthly deficit recorded since February 2021.

The deficit declined by 86pc on a year-on-year (YoY) basis, official data shows.

The decline in the CAD was owing to a fall in imports while no higher exports or inflows were noted. Though the balance of payment reflected a healthy sign for improvement in the external front of the country’s economy, the government is unable to meet even this decreasing CAD due to extremely poor foreign exchange reserves.

The February deficit was even much lower than January’s $230m. The decline made a trend for the CAD during FY23 and may end up with much lower deficit compared to last year. The CAD stood at 17.4bn during the last fiscal year (FY22).

This figure is a real problem for the country as the International Monetary Fund (IMF) has been asking the government to arrange the amount needed to meet the CAD by the end of FY23.

Imports of goods during the first eight months of FY23 fell by almost $10bn and exports by around $2bn. The poor exports with much higher imports did not allow the country to find a balance on its external front.