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August’s current account deficit drops to $160 million

KARACHI: Despite the loosening of import restrictions as part of an agreement with the International Monetary Fund, the current account deficit (CAD) decreased by over 80% to $160 million in August from $775 million in July.
According to State Bank figures released on Thursday, the Canadian dollar decreased by 54% to $935 million from $2.035 billion during the same time of the previous fiscal year.
Details revealed a fall in both goods imports and exports. In 2MFY24, imports decreased to $8.49 billion from $11.457 billion in 2MFY23.
Additionally, the exports of goods fell to $4.542 billion during the course of the two months from $4.951 billion during the same period last year.
The liberalization of imports would unquestionably raise the trade imbalance, which in turn would lead to a rise in the current account deficit.
The import limitations were a major factor in reducing the CAD from $17.5 billion in FY22 to $2.4 billion in FY23. The $3 billion in IMF Stand-By Arrangement imports have to be opened by the government.
Bankers claimed that despite this, limits on imports still exist because banks are now required to open letters of credit only after securing funding. For FY24, the government has budgeted $6 billion CAD.