ISLAMABAD: The financial position of the government continues to get stronger, as in the month of November 2020, Pakistan’s current account surplus rose further to $447 million against a deficit of $326 million in November 2019.
According to the statistics released by State Bank of Pakistan (SBP), so far in FY21 the surplus has reached $1.6 billion compared to a deficit of $1.7 billion over the same period last year. In contrast to the previous 5 years, current account has been in surplus throughout FY21 due to an improved trade balance and a sustained increase in remittances. During the first five months of FY21, workers’ remittances have reached an unprecedented level of US $11.77 billion, 26.9% higher than the same period last year. On average, workers’ remittances have been about half a billion (US $499 million) higher in each month of FY21 as compared to the same period last year.
The Pakistan Bureau of Statistics showed that in November 2020, both exports and imports picked up, reflecting recovery in external demand and domestic economic activity. During July-November 2020, exports slightly increased by 2.1% and stood at $9.7 billion, as compared to $9.5 billion in the same period of last year.
In absolute terms, there was an increase of $201 million in exports in five months. Imports that were on a declining path have started picking up – a trend indicating restoration of economic activities but also signalled widening of the trade deficit. Imports during the July-November period increased 1.3% or from $247 million to $19.4 billion. As a result, the balance of trade recorded a marginal increase of 0.5% to $9.7 billion.
This turnaround in the current account, together with improvement in financial inflows, raised SBP’s foreign exchange reserves by around $1 billion in November 20. At $13.1 billion, they are now at their highest level in 3 years.
Prime Minister Imran Khan commented on this development in a tweet this morning, labelling it a “tremendous turnaround.”