Pakistan’s Current Account Deficit shrinks 37% YoY in 1Q of FY23

[CrazyZ]

Pakistan’s Current Account Deficit shrinks 37% YoY in 1Q of FY23​

By
Web Desk
-
October 20, 2022

Islamabad: Pakistan’s current account deficit shrank more than 37% on a year-on-year basis during the first quarter (July-September) of the fiscal year 2023.
According to a monthly report published by the State Bank of Pakistan on the balance of payments, during the first three months of FY23, the current account deficit of Pakistan amounted to $2.2 billion. Compared to the $3.52 billion recorded during the same period last year, this year’s CAD dropped by 37.4%.

Pakistan’s current account deficit shrinks 42pc to $0.7bn in August

Similarly, on a month-on-month basis, a decline has been witnessed in September alone as the current account deficit also narrowed down by 53.2%. It fell to $0.3 billion, compared to the $0.67 billion that was recorded in August.
The SBP attributed the significant shrinkage in CAD to the declining trend in imports.

The report said that during the first quarter of FY23, the imports of goods and services clocked in at $18.36 billion, whereas the exports of goods and services amounted to only $9.28 billion.

Trade deficit of Pakistan declines 21.32% YoY during first quarter of FY23​

The trade deficit of Pakistan recorded in the first quarter of the fiscal year 2023 declined 21.32% on a year-on-year basis, the Pakistan Bureau of Statistics (PBS) reported on Tuesday.
According to the revised data on monthly trade statistics by PBS, during the first quarter of FY23 (July-September), the trade deficit amounted to $9.2 billion. Compared to the deficit of $11.7 billion recorded during the same period of FY22, that is a sharp 21.32% drop.
The total imports during the first quarter stood at $16.44 billion compared to $18.71 billion recorded last year during the same period. Meanwhile, on a YoY basis, exports rose to $7.17 billion from $6.99 billion recorded last year in the first quarter.
August trade deficit swells to $3.5 billion MoM

In September alone, the trade deficit amounted to $2.9 billion, falling from August’s $3.58 billion. The imports in September fell to $5.34 billion from $6 billion on a month-on-month basis. Exports, however, also recorded a slight decline on an MoM basis in September as they fell to $2.44 billion from $2.48 billion.

It should also be noted that the trade deficit of Pakistan recorded a whopping increase of 55.7% during the fiscal year 2022, taking the total imbalance between imports and exports to $48.38 billion. Fuelled by the soaring trade imbalance and rising current account deficit, the forex exchange reserves have fallen to the $7.59 billion level as of October 7.

Pakistan’s Current Account Deficit shrinks 37% YoY in 1Q of FY23 - Pakistan Observer

Pakistan's current account deficit shrank more than 37% on a YoY basis during the first quarter (July-September) of the fiscal year 2023.

pakobserver.net

 

[Mrc]

This is positive

If next govt can produce growth with a controlled CAD that's the solution to Pakistans economic problems

 

[CrazyZ]

This is positive

If next govt can produce growth with a controlled CAD that's the solution to Pakistans economic problems

Only viable option. Live within your means. Luxury import ban should continue. No power plant that uses imported fuel should be approved. Existing ones that use imported oil should be retired. There should be a moratorium on non-PKR debt.

 

[Hakikat ve Hikmet]

80% of the Pak economy is undocumented and unregulated. Make the IMPORT part of it 95%. All CAD problems solved....

Pak needs to 100% leverage the following:

• 100% sanctioned Iran
• 100% narcotic Afganistan
• 100% money laundering UAE
• Etc.

 

[SoulSpokesman]

Wow! Good job by Showbaaz govt. India has a monthly CAD of almost USD 10 billion as against only 0.7 bn for Pak. Even accounting for the economy being bigger by 7 times in India, that means India should be having a monthly CAD of 5 bn or alternatively Pak has to have a CAD of USD 1.4 billion per month. Credit must be given where due.

Regards

 

[epebble]

Wow! Good job by Showbaaz govt. India has a monthly CAD of almost USD 10 billion as against only 0.7 bn for Pak. Even accounting for the economy being bigger by 7 times in India, that means India should be having a monthly CAD of 5 bn or alternatively Pak has to have a CAD of USD 1.4 billion per month. Credit must be given where due.

Regards

It is not a sensible comparison as Pakistan is constrained by foreign currency crisis. Also, CAD is not something one should be proud of; if anything, developing countries should aim for current account surplus to improve employment. India's $120 billion CAD means 120 million Indians are needlessly unemployed. That is a 10% unnecessary increase in unemployment rate.

 

[Ssan]

CAD is only slightly below where PTI govt left it in February. Except when PTI left, it was already on downward trajectory until PDM took over. This is not fooling anybody

I remember when dawn and local media was screaming that PTI was taking 10-11 bn$ Loans every year to service our debt. Yet, none of these mofos see a problem with a whopping 31 bn$ of loans this year.

 

[CrazyZ]

CAD is only slightly below where PTI govt left it in February. Except when PTI left, it was already on downward trajectory until PDM took over. This is not fooling anybody

PTI is over all better than PPP or PMLN but they made big mistakes in oil and gas policy that contributed to the rapid depletion of forex, IMO. Pakistan does not have the reserves or budget to sustain fuel subsidies.....PTI kept in place anyways. PTI made a huge drama around renegotiating fixed price 2015 LNG contracts with Qatar (.....those prices are a huge bargain today). Instead of signing another big fixed price contract with Qatar.....they signed market rate contracts with suppliers that default today.

 

[SoulSpokesman]

@epebble

Also, CAD is not something one should be proud of; if anything, developing countries should aim for current account surplus to improve employment.

Of course! That is what I am saying too. India is faring poorly on CAD, I am worried about that

Regards

 

[SaadH]

This is positive

If next govt can produce growth with a controlled CAD that's the solution to Pakistans economic problems

Cut off your nose to spite your face...

Dar the munshi has killed the exports yet again...pretty soon Afghanistan will surpass Pakistan on exports.

 

[Olympus81]

Open the import LCs and you’ll know.

 

[Ssan]

PTI is over all better than PPP or PMLN but they made big mistakes in oil and gas policy that contributed to the rapid depletion of forex, IMO. Pakistan does not have the reserves or budget to sustain fuel subsidies.....PTI kept in place anyways. PTI made a huge drama around renegotiating fixed price 2015 LNG contracts with Qatar (.....those prices are a huge bargain today). Instead of signing another big fixed price contract with Qatar.....they signed market rate contracts with suppliers that default today.

PTI political economy was populist for sure. But as the facts have settled, they did have a way to pay for the oil subsidies by taking Russian oil on discount. As far as gas, we need to increase local gas prices. We would not need to import if we could. The long term contract with Qatar may look good now on the market but was looking very expensive prior.

 

[Mrc]

Cut off your nose to spite your face...

Dar the munshi has killed the exports yet again...pretty soon Afghanistan will surpass Pakistan on exports.

Actually it's not true. Exports are holding . Imports are down

That's how you cut CAD in first place .

PTI has so much going for it ....don't need to twist facts .that would bite back

Open the import LCs and you’ll know.

Why shud they do that? Why can't we learn to live within our means?

 

[arslank03]

PTI political economy was populist for sure. But as the facts have settled, they did have a way to pay for the oil subsidies by taking Russian oil on discount. As far as gas, we need to increase local gas prices. We would not need to import if we could. The long term contract with Qatar may look good now on the market but was looking very expensive prior.

Not feasible:

-only 3 Russian blends are suitable for refinement in pak refineries.

-PNSC cant call on Russian ports so an intermediary is needed

-shipping costs may be up to 10x greater for Russian oil per barrel vs ME oil

-we have long term contracts with the ME for oil

-shipment takes 5-6x longer

-no payment system, ruskies dont want dollars anymore- not like we have any anyway

Refineries respond to questions on importing Russian oil

KARACHI: In separate letters on Friday, oil refineries responded to the Ministry of Energy on the question whether it is possible to import Russian crude, Profit has learnt. In a letter written b

profit.pakistantoday.com.pk

Cons outweigh pros as govt examines Russian oil options

None of the Pakistani refineries can handle 100pc Russian crude of any grade, say sources.

www.dawn.com

Officials say Pakistani oil refineries only have capacity to process 30 percent Russian crude oil

KARACHI: Officials at refineries in Pakistan have said given “technical and operational constraints,” the South Asia country can only process up to 30 percent of Russian varieties of crude oil, as Pakistan explores cheaper import options and experts warn a deal with Moscow could become a new...

www.arabnews.pk

our 'analysts' claim its possible whereas our refineries dont want to touch it, it makes little economic sense, i wonder whether we will ever get a proper cost vs benefit analysis, because a 5x longer shipping time will make it difficult to adjust for demand, a new payment system may be complicated and take a long time, shipping costs could very well kill off any benefits there were. Unless im misunderstanding, Ural was less than $20 cheaper per barrel, but if we account for the shipping, intermediary, payment fees in the end i dont think the saving there is worth ruining relationships. On top of that, even at record low prices India paid, they were losing alot of money and their oil companies had to be bailed out by the GOI. I suspect the more suitable blends for our refineries may even have less of a discount ! Oh and these prices im pretty sure were for export to the west, the saudis increased pricing for the west and reduced them for asia

 

[arslank03]

Cut off your nose to spite your face...

Dar the munshi has killed the exports yet again...pretty soon Afghanistan will surpass Pakistan on exports.