Government anticipates a recovery from a substantial financial account deficit, a critical component of the Balance of Payments (BoP), projecting a surplus of $200 million by the end of this fiscal year 2023-24. The monetary policy statement outlines optimism for easing BoP pressure, highlighting a manageable current account balance and expected improvements in the financial account.
The financial account experienced a deficit of $5.4 billion in July-November 2023, compared to a $1.26 billion surplus in the previous year. Factors contributing to the deficit include a slowdown in private foreign borrowings, faster repayment of short-term debts, and a trade-credit deficit. Efforts to address the financial account deficit include reducing trade-credit deficits, slower external borrowing repayments, and increased FDI and ODA inflows. Despite an expected shift in the current account to negative, the overall BoP scenario hints at greater balance and resilience in the coming months.
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