Current account posts $255m surplus in May

The country posted a surplus of $255 million in May compared to a $1,506m deficit in the same month last year thus grossly reducing the current account deficit (CAD) in the outgoing fiscal year. A late-night despatch from the State Bank of Pakistan (SBP) on Monday showed the CAD narrowed by 80.58 per cent to just $2.943bn during July-May FY23 from $15.16bn in the same period of last fiscal year. Despite a sharp reduction in CAD, the fears of sovereign default are still looming as the government fails to boost its dwindling foreign exchange reserves amid sharp contraction in exports and remittances. This massive narrowing down of CAD heavily cost the economy as the imports were chopped down to reduce the trade deficit but this caused a slowdown in industrial production due to shortages of raw materials. Amid SBP restrictions imports of goods dipped to $48.9bn during the first 11 months of FY23 compared to $64.339bn in the corresponding period last year. But this drastic reduction badly hit the economic growth which fell from 6.1pc in FY22 to 0.29pc this year.