KARACHI: Pakistan’s current account deficit fell to $0.4 billion in December 2022 from $1.9 billion a year earlier, the central bank said on Wednesday, 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 $4.3 billion – enough cover for just three weeks of imports – and the country’s International Monetary Fund (IMF) bailout program has been stalled for months.
December’s figures mean Pakistan has brought its current account deficit for the first half of the financial year that began in July 2022 down to $3.7 billion from over $9 billion in the corresponding period in the previous financial year, the State Bank of Pakistan (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 program it entered in 2019. The World Bank has also delayed the approval of two loans worth $1.1 billion.
“Machinery imports are low due to a slowdown in overall economic activities, curbs by SBP on the import of plant and machinery, higher interest rates, and uncertainty with respect to the IMF program,” Tahir Abbas from Karachi-based brokerage firm Arif Habib Limited told Reuters.
He said the trade balance had improved but there was a drop in remittances that meant the current account deficit had increased from November 2022, while interest payments and dividend repatriation also played a role.
Fahad Rauf at Ismail Iqbal Securities played down the improving trade deficit.
“There is no choice and no one can take credit for this. We are not shopping because we don’t have money. And no one is lending,” he said.
Central bank says Pakistan’s current account deficit fell to $0.4 billion in December
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Central bank says Pakistan’s current account deficit fell to $0.4 billion in December
- Pakistan has looked to curb imports to reduce external financing needs with economy witnessing a slowdown
- Amid the country’s economic woes, the World Bank has delayed the approval of two loans worth $1.1 billion
Pakistan PM calls for faster CPEC implementation, pledges security for Chinese workers
- Shehbaz Sharif pushes expanded cooperation in agriculture, IT and mining under CPEC phase two
- Chinese envoy reaffirms Beijing’s support for Pakistan’s sovereignty and economic development
ISLAMABAD: Prime Minister Shehbaz Sharif on Friday called for speeding up projects under the China-Pakistan Economic Corridor (CPEC) and pledged stronger security guarantees for Chinese workers and investments, during a meeting with China’s ambassador in Islamabad.
Sharif made the remarks as the two countries strive to launch the second phase of CPEC, a multibillion-dollar infrastructure and energy initiative launched in 2015 as part of China’s Belt and Road Initiative (BRI).
CPEC’s first phase focused largely on power generation and transport infrastructure aimed at easing Pakistan’s chronic energy shortages and improving connectivity. The second phase seeks to expand cooperation into industrial development, with an emphasis on special economic zones and export-oriented growth.
“While highlighting the importance of accelerating ongoing CPEC projects, the Prime Minister stressed on the need to enhance cooperation in agriculture and IT and mining & minerals,” said a statement circulated by the PM Office after the meeting.
“He also underscored Pakistan’s resolve to provide a secure and conducive environment for Chinese personnel, investments, and institutions in Pakistan,” it added.
Chinese nationals and projects in Pakistan have faced security threats in the past, including attacks by militant groups targeting infrastructure sites and convoys. Islamabad has repeatedly vowed to tighten security and has deployed special protection units for Chinese workers.
China is Pakistan’s closest ally in the region and a key economic partner, with CPEC widely regarded by Islamabad as central to long-term economic growth.
During the meeting, the prime minister conveyed greetings to Chinese President Xi Jinping and Premier Li Qiang, particularly on the occasion of the Chinese New Year.
China’s Ambassador to Pakistan, Jiang Zaidong, reiterated Beijing’s support for Pakistan’s sovereignty and socioeconomic development, according to the statement. Both sides also exchanged views on regional and international issues and agreed to maintain close coordination.
