KARACHI, July 21: Pakistan’s current account deficit reached $14.4 billion at the end of last fiscal year, State Bank of Pakistan reported on Monday.

The imbalance was mainly because of very high trade imbalance which was substantially aided by the services imbalance.

According to the data released by the State Bank of Pakistan, trade and services imbalances collectively stood at $21.588 billion, of which trade imbalance was of $15.286 billion while that of services was $6.302 billion.

As imbalances were recorded higher, the country faced serious crunch of foreign exchange reserves. The imbalances put the country in trouble to remain in the market with cash for its imports.

The data showed that it was not the oil payments alone putting pressure on the country’s balance sheet since total imports reached about $40 billion while the country’s oil payment remained around $11.38 billion.

The country paid $7.345 billion for oil import last year which means the country paid additional $4 billion for oil payments this year.

The country’s huge current account imbalance is considered more serious in the wake of erosion of country’s foreign exchange reserves.

The foreign exchange reserves of the country fell to $10.830 billion from $16.486 billion in October 2007 a slash of $5.65 billion.

The import list of the SBP showed that the import bill was higher also because of edible oil bills of $1.5 billion, raw cotton of over $ 1 billion, mobile phones, cars, and other items which may be curtailed.

The direct impact of over $21.5 billion trade and services deficits directly made an impact on the rupee-dollar parity, and rupee started sliding downward against the US dollar.

The impact of wide current account deficit which means the country requires additional resources to meet the deficit, resulted in devaluation of Pakistani rupee by 15 per cent since the beginning of this calendar year.

“The burning question is: Has the government any plan to curtail this huge import,” said an analyst. He failed to trace any sign for curtailing the import in the trade policy which has been just announced.

“The trade policy talks about slightly higher export target, but the import target was not specifically mentioned,” he said.

Analysts said even if the petroleum bills are curtailed with the help of deferred oil bills, the impact on the total import would not be significant enough to strengthen the country’s external account position.

“What we need is a jump of $5 to $7 billion in the total reserves of the country to maintain it around $18 to $20 billion. This can help the local currency face the pressure of US currency,” said Atif Ali, a currency dealer.

However, most of the analysts see no hope for sudden jump in the reserves of the country.