The current account maintained a surplus for the second straight month witha huge surplus of $805 million from July to August of the current fiscalyear 2020-21.
According to data updated by the State Bank of Pakistan, the countryreported a surplus of $297 million in August and $508 million (revisedfigures) in the month of July. Last year, the country recorded a deficit of$1.2 billion in the same period.
The handsome surplus shows stability in external accounts backed by thevarious measures of the economic managers of the present government. Theimprovement in the trade bill and the handsome inflows of the remittancescontributed to the surplus during the first two months of the currentfinancial year.
The import of goods reduced to $6.73 billion from $7.7 billion and theimport of services also decreased to $1.22 billion from $1.81 billionduring the period. The reduction of the import bill also supported thebalance of payments of the country, helping contain the deficit.
Remittance inflows, on the other hand, reached an all-time high of $4.83billion in the said period, which ultimately turned the current accountinto surplus.
Meanwhile, the export of goods stood at $3.42 billion and services stood at$758 million in July and August. The exports declined year-on-year howeverthey slightly picked up on a month-to-month basis as the economicactivities are being restored globally and locally.
Commenting on the present positive trend of the current account, SBP said,
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Efforts to attract workers’ remittances, flexible exchange rate andrelatively benign import prices explain the improving current accountbalance.
The remittance numbers are still growing while imports are growing slower.It gives confidence to Rupee investors and dispels depreciatingexpectations, said A.A.H Soomro, Managing Director at Khadim Ali ShahBukhari Securities. The currency ought to remain stable at Rs. 165 per USdollar, with spacing for appreciation. The slowdown in remittances isimminent as exports ought to compensate for the loss, he added
This is the fourth surplus of the current account reported by the presentgovernment. Previously, it reported a surplus of $508 million in July 2020,$13 million in May 2020, and a surplus of $99 million in October 2019 aftera four-year gap.
It is expected that imports and exports of goods and services may witness agradual growth in months to come, though the government should focus tocontain the import bill and enhance exports along with remittances tomaintain the positive trend of current account surplus, which is indeed aherculean task.
