Pakistan's Current Account Deficit at an all-time high

Amid the continuing economic woes, Pakistan's Current Account Deficit (CAD) rose to an all-time high of USD 2.56 billion in the month of January 2022.

CAD is the difference between a country's foreign expenditure and income.

The deficit of USD 2.56 billion in January 2022 was 12 times higher than the USD 219 million recorded a year ago in January 2021.

"No one had expected the deficit to rise to such a high level," said researcher Tahir Abbas as quoted by The Express Tribune.

"The current account deficit rose largely due to imports in kind that are fully financed," the State Bank of Pakistan (SBP) said on its official Twitter handle on Thursday. "Excluding these (imports in-kind), the deficit would have been around $1 billion lower in January 2022."

The cumulative CAD for the first seven months (July-January) of the current fiscal year (2021-22) amounted to USD 11.58 billion compared to a surplus of USD 1.03 billion in the same period of the previous year, according to the SBP.

The deficit is expected to remain high given the international petroleum crude benchmark (Brent) hit an eight-year high of over $100 per barrel on Thursday amid the Russia-Ukraine crisis.

The all-time high CAD comes at a time when Pakistan's debt and liabilities hit an all-time high of Rs 51.724 trillion in December 2021.

The Ministry of Economic Affairs reported on Wednesday that it booked gross foreign loans of USD 11.8 billion in the July-January period of the fiscal year 2021-22.

The country is in a debt trap and the Imran Khan government is looking for new debt instruments. He is also struggling to find ways to increase Foreign Direct Investment (FDI).

The existing debt products seem insufficient to meet the growing borrowing requirements and the country is sliding down economic chaos.

( With inputs from ANI )

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