Pakistan’s current account deficit — the gap between the country’s higher foreign spending and lower incomes — widened to a 13-year high of $2.6 billion in January 2022 as higher commodity prices in international markets led to a surge in import payments.
This is the highest monthly current account deficit ever recorded. The last time such a high figure was reached was in October 2008, when it was $2.03 billion.
According to the State Bank of Pakistan, the country’s current account deficit has grown from $1.9 billion in December 2021 to $2.6 billion in January 2022.
The bank account noted on its official Twitter account that the change was largely due to the fact that physical funds for imports were fully in place.
“Excluding these, the deficit would have been around $1 billion lower in January 2022,” the SBP wrote.
Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq said the deficit number was higher than expectations, “due to higher than expected imports.”
Meanwhile, Arif Habib Limited Head of Research Tahir Abbas said that the current account recorded a 37% increase on a month-on-month basis.
“This is the highest-ever deficit in the history of Pakistan,” he said.
Shedding light on the reason behind a massive increase, the analyst said that the current account deficit widened due to a higher-than-expected trade deficit of $3.9 billion during the month under review.