The fiscal year 2020-21 ended with a large current account deficit (CAD) of $1.8 billion despite showing a surplus till the end of the first 11 months (July-May) period of the year mainly driven by higher imports in the last month.
The State Bank of Pakistan (SBP) data issued on Monday showed that the CAD in June reached $1.644bn, the highest monthly deficit in FY21. The central bank also revised upwards the May deficit to $650 million against the earlier reported figure of $632m. The CAD in the outgoing fiscal year was 59 percent smaller when compared with $4.449bn deficit the country posted in FY20. The government was expecting FY21 to end up with a surplus but a large deficit in June proved it wrong.
Earlier, SBP Governor Reza Baqir said the CAD for FY21 would be below 1pc of GDP despite strong growth in remittances.
In a tweet on Monday, the State Bank said that in line with SBP projections, CAD in FY21 fell to only 0.6pc of GDP. “This is the lowest in 10 years,” said the SBP, adding that the country’s external position is at its strongest in many years with remittances at an all-time high. Foreign exchange reserves rose by $5.2bn in FY21 to over $17bn, a four-and-half year high, the SBP added.