Current account in surplus after four months

The current account deficit (CAD) declined sharply by 81 per cent in the first two months of the financial year (FY25) while August posted surplus after four months. The declining trend has finally produced a $75 million surplus for August, compared to a deficit of $152m in the same month of the previous year. This must be a big relief for the government as it is struggling to deal with a huge surplus requirement for external debt servicing. The government needs $26.2 billion for debt servicing in FY25 — a head which is rising every year. According to financial experts, this is not a good sign for the economy. The IMF loan of $7bn, likely to be approved next week, would be used to repay the debt and interest on it. Despite this inflow, the government still requires rollover of $12bn from China, Saudi Arabia and the UAE.