Current account deficit falls to $0.4bn in Dec: SBP

The State Bank of Pakistan (SBP) said on Wednesday the current account deficit (CAD) fell to $0.4 billion in December 2022 from $1.9bn a year earlier, as the cash-strapped government slashed imports in a bid to avert an external payments crisis. Foreign exchange reserves held by the central bank stand at $4.3bn — enough cover for just three weeks of imports — and the International Monetary Fund’s (IMF) bailout programme has been stalled for months. December’s figures mean Pakistan has brought its CAD for the first half of the financial year that began in July 2022 down to $3.7bn from over $9bn in the corresponding period in the previous financial year, the SBP said. Pakistan has looked to curb imports to reduce external financing needs. The economy has witnessed a sharp slowdown in the face of a financial crisis, compounded by devastating floods last year that inflicted billions of dollars of damage. Expected external financing inflows have slowed as the country struggles to implement economic reforms under the IMF programme it entered in 2019. The World Bank has also delayed the approval of two loans worth $1.1bn.