KARACHI, Sept 17: The current account deficit widened sharply to $2.572 billion in July and August, the first two months of the current fiscal year, the State Bank of Pakistan said on Wednesday.

This compared to $1.571 billion in the same period last year.

The two-month deficit is equivalent to about 1.6 per cent of gross domestic product (GDP), and compares with a full-year target of 6.0 per cent of GDP.

The current account balance without official transfers, transfer payments which are directly made to the government, amounted to $2.633 billion, compared with $1.575 billion in the same period of 2007-08.

“There were hefty oil payments in August,” said Asif Qureshi, head of research at Invisor Securities Ltd.“With oil prices coming down, we might see some pressure ease off the current account balance.”

However analysts said the July-August current account number was alarming and in the short-term steps to reduce imports would be necessary.

Pakistan’s trade deficit widened to $1.87 billion in August compared with $1.64 billion in July and $1.28 billion in August last year.

The consumer price index in August rose 25.33 per cent from a year earlier, compared with a full-year target of 12 per cent for the current fiscal year.—Reuters