Pakistan’s current account deficit (CAD) hit a two-year low of $74 million in a month, narrowly failing to turn around the country’s deficit into surplus in February.

The government achieved the significantly low deficit through limiting imports to manage with low foreign exchange reserves and high risk of default on foreign debt repayments.

The low imports, however, slowed down economic activity next to nil and left millions of people jobless in the country.

State Bank of Pakistan (SBP) reported on Monday that “the current account deficit (was) recorded at $0.1 billion in February 2023 against a deficit of $0.5 billion in February 2022.

Also read: Agri sector can wipe out CAD in 6 years

“Cumulatively, CAD was reduced to $3.9 billion in (eight months) Jul-Feb FY23 compared to a deficit of $12.1 billion in Jul-Feb FY22,” said the central bank.

Securities brokerage firm Arif Habib Limited said in a brief commentary that “the primary reason behind the decline in deficit (CAD) was a 24% decline in total imports (compared to the same month of the last year).”

The country’s current account deficit declined 86% to $74mn in February compared to a deficit of $519mn in the same month last year.

“This is the lowest monthly deficit (CAD) since February 2021,” said Arif Habib Ltd.

However, total exports and remittances also decreased by 19% and 9% in the month, respectively, compared to the same month of last year.

In the first eight months (Jul-Feb) of the current fiscal year, the country’s deficit cumulatively decreased by 68% to $3.9bn compared to a deficit of $12.1bn during the same period last year.

Read more: The genesis of current account deficit

Pakistan’s foreign exchange reserves are estimated to be at $4.8bn at present after China refinanced $500mn last week.

The reserves, however, are barely enough for one month of import cover and not enough to make the due repayment of around $7bn over the next four months (Mar-June FY23).

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