Karachi January 23 2023: The reduction in the current account deficit, the external sector remains under stress due to delay in realization of
official financial inflows, debt repayments and ongoing political uncertainty, says State Bank of Pakistan.
In this regard, the MPC views that the completion of the pending 9th review under the IMF’s EFF is critical for reducing uncertainty and
unlocking multilateral and bilateral inflows.
The current account deficit narrowed by around 60 percent to $3.7 billion in H1-FY23. This substantial reduction was due to a sharp contraction in imports, reflecting the impact of policy tightening and administrative measures. The contraction in imports was broad-based, with all major groups, except food and petroleum groups, recording declines.
Petroleum imports increased by 17.4 percent (BOP data), resulting in their share (in total imports) rising to 34.1 percent in H1-FY23 from 23.7 percent in H1-FY22. In this backdrop, the MPC noted that effective implementation of energy conservation measures and appropriate
pricing of petroleum products is critical for much-needed reduction in energy imports.
The benefit of an 18.2 percent fall in imports was partially offset by declines in export receipts and remittances.