By Muskan Naveed ISLAMABAD, March 10 (INP-WealthPK): The current account deficit reached an all-time high of $2.55 billion in January 2022 as opposed to deficit of $291 million in January 2021, mainly driven by surging imports amid higher commodity prices, according to data released by the State Bank of Pakistan. The current account deficit registered a staggering 1.067% increase year-on-year, reported WealthPK. The current account records the value of both exports and imports in goods and services and international capital transfers. The current account is a major part of the balance of payments with the other two being the capital and financial accounts. The external imbalance is a major issue plaguing the Pakistani economy as imports continue to grow while exports and remittances do not show a significant growth. The central bank’s most recent figures for the current account deficit have caused a state of alarm in the country as the external sector appears to be coming under severe pressure. The provisional figures of the State Bank show that the current deficit stood at a staggering $11.579 billion during the first seven months (July-January) of the fiscal year 2022 against a surplus of $1.028 billion in the same period last year. The month-on-month increase in export of goods and services is a mere 16% while the import of goods and services grew by 44.9% in January 2022 over January 2021. Moreover, the remittances have witnessed a decline of 5% in January 2022 over January 2021. This resulted in a trade deficit of $4.340 billion in January 2022 against $2.488 billion in the same period last year, according to WealthPK. The current account balance as a percentage of the gross domestic product (GDP) was recorded at -0.6% in the fiscal year 2021 against -1.5% in FY20. However, the State Bank has painted a grim picture for the fiscal year 2022 as it projects the current account deficit to amount to nearly 4% of GDP. The increasingly unstable environment in the international market has led to a steep rise in oil prices – which is taking a hit on the Pakistani economy. Moreover, due to the coronavirus pandemic, vaccine imports have also comprised a significant chunk of the country’s import bill. However, steps have been taken to curb luxury imports through increased tariffs, which will have a long-term impact on cutting the import bill. Some positive headway can also be expected in bringing down the import bill as the government plans to convert 60% of the country’s power consumption to solar energy by 2030. Moreover, the government is also working towards addressing the inefficiencies that exist in the domestic power sector. Pakistan possesses an excess power generation capacity but an inefficient distribution network leaves the potential unrealised. The Cabinet Committee on Energy has also recently revised the Circular Debt Management Plan in favour of more realistic goals.