Current account deficit widens to $2.12bn in Q3

afp

KARACHI: The current account again showed deficit of 156 million in March after posting a surplus month in February maintaining its position widening imbalance in current account with $2.12 billion gap by the end of third quarter of 2013-14, State Bank of Pakistan statistics said.
The deficit in the current account was come again on payment of debt-servicing, high import bills along with lesser inflows of foreign exchange from investments and exports receipts.
The current account deficit is 73 percent higher than the previous financial year that stood at $1.255 million in the same period whereas it surpassed central banks annual target of $1.8 billion deficit by the end of 2013-14.
In the last nine months, the trade deficit of goods and services continued to swell to $12.081 billion from $11.585 billion in the corresponding period of last fiscal year keeping the current account in the red.
The remittances in the nine months were seen growth to reach $11.583 billion maintaining its sustainable support to keep control over further deterioration of balance of payment situation. It maintained is double-digit growth of 11.8 percent year-on-year growth.
On the other hand, the net foreign investment witnessed surge of 6 percent in nine month of current financial year standing at $669.8 million compared with $631 million received during the same period a year earlier.
Economist said the impacts on currant account is lesser with the inflows of $1.5 billion from GCC received by Pakistan last month however the trade deficit witnessed little contract to from the previous month that stood at $12.58 billion as import bill declined considerably.
The debt-services payment also reduced due to impact of dollar Depreciation over Rupee. The average monthly deficit decreased to below 200 whereas it was touched $427 million in January. 
But the overall impact of foreign inflows is negligible over current account as different avenues of inflows went down at the same time.
The FDI dropped by 45 percent to $63.5 million in March which declined the overall growth of FDI from 18 percent to 6 percent by the end of three quarter of 2013-14.
However, the balance of payment situation is set to be turned into positive zone in the months to come as more inflow are likely in the next month including payment under Euro Bonds, Coalition Support Fund, FDI through 3G/4G licence auction and IMF tranches.
On the other hand, the Rupee recovery against Dollar may help reduce imports bill, debt servicing payments of the country to be sustainable impacts on balance of payment.

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