KARACHI: The current account deficit (CAD) narrowed by almost 80 per cent to $160 million in August from $775m in July despite the easing of restrictions on imports under an agreement with the International Monetary Fund.

The State Bank data issued on Thursday showed that the CAD contracted by 54pc to $935m during the July-August period of FY24 from $2.035bn in the same period of last fiscal year.

The details showed that both exports and imports of goods declined. The imports fell to $8.49bn in 2MFY24 against $11.457bn in 2MFY23.

The exports of goods also declined to $4.542bn during the two months against $4.951bn in the corresponding period last year.

The opening of imports would surely widen the trade gap which will eventually increase the current account deficit.

The import restrictions played a key role in bringing the CAD to $2.4bn in FY23 from $17.5bn in FY22. The government had to open imports under the IMF Stand-By Arrangements for $3bn.

However, bankers said restrictions on imports are still there in another form since banks have been asked to open letters of credit only after arranging dollars. The government has projected $6bn CAD for FY24.

Published in Dawn, September 15th, 2023