KARACHI: Pakistan’s current account deficit widened to cross $2 billion in the first seven months of current financial year 2013-14, State Bank of Pakistan (SBP) reported, mainly on the higher trade deficit showing deep concerns on economic indicators as its surpassed central banks annual projection of $1.8 billion deficit by the end of 2013-14.
The current account deficit showed a wide difference of more than four times in figures if current $2.055 billion compared with corresponding period of last financial year standing at 441 million. On the contrary, current account witnessed quite stabilized situation in December 2013 to get in a controlled state after receiving a tranche of $322 million from USA under Coalition Support Programme (CSF).
Economists said the current account situation grew as expected with ballooning import bills of services and goods and stagnant or declining exports earnings through goods and services. The situation of the balance of payment may witness slight improvement on temporary basis in the coming weeks as country receives third tranche of IMF, which is, $545 million, they said. In the recently, Pakistan repaid $149 million to IMF which may offset the inflows impact of international agencies.
The IMF made an initial payment of $540 million and $554 million as a second tranche of the loan in December 2013. But the situation of the balance of payment was seen settled not more than the month in which inflows are recorded. The trade deficit of goods and services continued to swell to $11.481 billion in the Jul-January from $9.511 billion in the corresponding period of last fiscal year keeping the current account in the red.
The remittances in the seven months were seen growth to reach $9.033 billion maintaining its sustainable support to keep control over further deterioration of balance of payment situation. It witnessed 10 percent year-on-year growth. On the other hand, the net foreign investment witnessed decline of 23.6 percent in the seven months of the current financial year 2013-14 due to restrictive inflows of capital in real sector reaching the overall inflows to $640.2 million compared with $691.8 million investment inflows recorded in the corresponding period of previous financial year.
The financial account which is primary source of funding current account also witnessed outflow of $435 million deteriorating the situation of external account as well. The source stood at $0.3 billion in last financial year and $1.3 billion in 2011-12. This along with significant repayment to IMF decreased the foreign reserves of the county to $7.589 billion retaining the pressure on rupee parity against dollar as well.
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